AO World PLC (AO) 2024年年度報告「LSE」.pdf

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1、AO World PLCAnnual Report and Accounts 2024The UKs Most Trusted Electrical RetailerContentsStrategic ReportHighlights 02Investment case 04Chairs statement 06Our markets 08How we create value 10What matters to us 12-Our culture 14-Our values 16-Our brand 18-Our customer focus 20-Our technology 22-Our

2、 eco-system of expertise and services 24Our strategy 26Chief Executive Officers strategic review 28Chief Financial Officers review 30Our risks 40Section 172 Statement and engaging with our stakeholders 50Section 172 Statement 52Sustainability 54Our ESG strategy 55Sustainable living 56Recycling 58Sup

3、porting the transition to a low-carbon economy 60Task force on climate-related financial disclosures(“TCFD”)62Climate-related risks and opportunities 64Fair,equal and responsible 72Our GovernanceGovernance at a glance 84Chairs letter and introduction 86Board of Directors 88Corporate Governance Repor

4、t 90Nomination Committee Report 98Audit Committee Report 102Directors Remuneration Report 108Directors Report 129Statement of Directors responsibilities in respect of the Annual Report and the financial statements 133Our FinancialsIndependent Auditors Report 136Consolidated income statement 145Conso

5、lidated statement of comprehensive income 146Consolidated statement of financial position 147Consolidated statement of changes in equity 148Consolidated statement of cash flows 149Notes to the consolidated financial statements 150Company statement of financial position 178Company statement of change

6、s in equity 180Notes to the Company financial statements 181Important information 187Glossary 188UKs most trusted electrical retailerWhat started as a 1 bet in 1999 became AO,the UKs most trusted major electrical retailer with over 500,000 Trustpilot reviews rating us 4.8/5.We sell over 7,000 differ

7、ent products on from major domestic appliances,small domestic appliances,audio visual equipment,computing,mobile,gaming to smart home technology.Millions of happy customers choose AO because were able to deliver quickly with our tried-and-tested logistics network as well as offering installation,ind

8、ustry-leading recycling,finance and insurance all underpinned by our trusted service thats magic in the moments that matter.1A strategy focused on five crucial pillars2Led by our purpose:making customers lives easier by helping them brilliantly3Living our values:ensuring we dont only make our mums p

9、roud,but make our grandchildren and future generations proud too by being a responsible retailerOur mission is to become the destination for electricalsOverviewStrategic ReportOur GovernanceOur FinancialsShareholder Information01AO World PLC Annual Report and Accounts 2024Highlights“A leaner,simpler

10、,more efficient business.”Read the Chairs statement on pages 6 and 7.“Driving forward our more efficient model centred around trust and excellence.”Read the CEO statement on pages 28 to 30Geoff CooperChairJohn RobertsChief ExecutiveWho do customers trust?Trustpilot ratings1ExcellentRating 4.8/5 532,

11、308 FY23:394,1444&5-Stars94%1,2&3-Stars6%Were the UKs most trusted electrical retailer.1 Trustpilot scores sourced from their website,FY24:April 2024,FY23:March 2023.2 A customer is defined as an individual customer who has purchased through us via 14,00012,00010,0008,0006,0004,0002,0000FY14FY15FY16

12、FY17FY18FY19FY20FY21FY22FY23FY24Cumulative Customers2(000s)“I can always trust AO to get my new devices to me in good time and good condition.”Jessica,AO Customer“AO offers a broader variety of electrical goods than most of its UK competitors,and the coffee maker I ordered is ideal.It was delivered

13、within 2 days,as specified on the order and the delivery service was exemplary.I have ordered products from them many times over the years,and the service has always been excellent.”Mike,AO CustomerAO World PLC Annual Report and Accounts 202402Financial KPIs1“AO is the difference between doing a job

14、 and caring enough to go the extra yard.”Ross,AO CustomerGroup revenue(m)Group Adjusted PBT2(m)Cash flow3(m)FY20 FY21FY22 FY23 FY249011,4351,3681,1391,039FY20 FY21FY22 FY23 FY2424.343.5(9.6)1234.3FY20FY21FY22FY23FY24(22.1)(47.6)60.2(0.3)21.0Operational highlights:y Strategic pivot to focus on profit

15、 and cash generation successfully delivered,with continued focus on driving efficiencies and controlling overheads.y AO remains a UK market leader in Major Domestic Appliances(“MDA”)with a 15%total market share.y Over 600,000 new customers experienced the AO Way during the year,with repeat customers

16、(who accounted for 54%of all customers)taking an increasing share of overall business.y Customer satisfaction scores remain best in class,with over 500,000 Trustpilot ratings,averaging an“Excellent”4.8/5 stars as we continue to be the UKs most trusted electrical retailer.y Despite the difficult loss

17、-making trading experienced in our mobile business in the year,we look forward to FY25.We have strengthened our position in the mobile market with the acquisition of affordablemobiles.co.uk and ,giving us additional sale channels from which to grow our mobile business,in a challenging market.y Recyc

18、led or refurbished our seven millionth appliance at our AO Recycling facility and continuing to work with third parties to use our recycled plastic in new products.1 Unless otherwise stated,all numbers including any restated comparatives,relate to the continuing operations of the Group and,therefore

19、 excludes the impact of Germany.Refer to Note 35 on page 178.Reconciliation of alternative performance measures and the change from the prior year can be found in the Chief Financial Offiicers Review on pages 32-39.2 Adjusted PBT is defined as a profit/(loss)before tax,adjusted for any non-recurring

20、 items as defined by the Board.3 Net increase/(decrease)in cash.4 Net funds is defined as cash less borrowings,less owned asset lease liabilities but excluding right-of-use asset lease liabilities.Net funds also includes any cash overdrafts and owned asset lease liabilities in Germany.Adj.profit bef

21、ore tax:34.3m(FY23:12m)Net funds4:34.4m(FY23:3.6m)AO World PLC Annual Report and Accounts 202403OverviewStrategic ReportOur GovernanceOur FinancialsShareholder InformationThe destination for electricalsInvestment caseThe electricals market has grown 14%1 over the last ten years,and moved increasingl

22、y online over this period.As one of the market leaders in digital retailing of electricals,we are focused on cementing this change in consumer habits to ensure that AO is the destination of choice in electrical retailing.Through the AO Way,we leverage our expertise to deliver a seamless and compelli

23、ng customer offer.Our scale,supplier relationships,customer focus and market expertise have resulted in consistently high customer satisfaction ratings.Our strong profitability and solid UK market positions underpin our long-term investment case.1 Analysis of GfK data for the ten years ended 31 Marc

24、h 202404AO World PLC Annual Report and Accounts 20241The destination of choice for digital electrical retailing We are a digital retailer of electricals with a leading market share in major domestic appliances(“MDA”)and a growth opportunity with the capability to grow market share in small domestic

25、appliances(“SDA”),computing,consumer electronics and mobile.We are a natural market disrupter with an ambitious mindset,underpinned by strong partner relations and efficient logistics operations.3Efficient,scalable business model We operate a centralised and vertically integrated model where experts

26、 in our disciplines create best practice solutions and drive innovation efficiently and consistently across our businesses.This operating model enables us to gain maximum operational gearing at the lowest cost per sale.It also guarantees a consistently high-quality customer experience across our bus

27、inesses.2A compelling customer offering is at the heart of our strategy We focus on being brilliant for our customers,and our teams care passionately about keeping our customers happy.We make it easy for customers to buy what they need,when they need it,with comprehensive product information,next da

28、y delivery and installation,competitive pricing and recycling.Our focus on creating an exceptional customer experience is the basis of our long-term market leadership strategy.We empower our people to make the right decisions,not necessarily the easy ones,to deliver for our customers and partners.4L

29、ong-term partner relationships Our relationships with manufacturers span the full range of internationally recognised household names who rely on us to create a quality digital experience for their products and our customers.We collaborate with them to ensure that our customers have the widest choic

30、e of products to meet their specific needs at attractive pricing levels.Manufacturers also collaborate to help formulate our B2B offering and support our sustainability initiatives,working with us to research ways of reusing high engineered plastic parts in new build models.We work with a valued net

31、work of suppliers,from small local firms to large international businesses including mobile network providers,delivery firms and financial services providers that underwrite our product protection and consumer credit plans.These partners help ensure that our customers have the best possible experien

32、ce from the start of their purchase journey to recycling of their old products at our own recycling site.6Our amazing cultureOur excellent 4.8 star Trustpilot rating makes us the UKs most trusted major electrical retailer;this doesnt happen by accident,its the result of our enthusiastic and dedicate

33、d AOers.Our people are at the heart of our strategy,and we inspire them to be innovative and bold in delivering for our customers.We encourage collaboration and innovation across our businesses and motivate them to work at AO speed to deliver today rather than tomorrow.This entrepreneurial spirit of

34、 developing new opportunities and relentlessly striving to do better is at the heart of our corporate culture and helps us keep growing and adapting to changes in our fast-moving markets.It is the combination of all these factors and the alignment of our people to our purpose,values,business strateg

35、y and priorities that creates our AO culture supporting our continued growth.5Supporting sustainability to create a better world Our culture to always do the right thing,our customers concerns about sustainability and changing government regulation,means that sustainability is at the heart of our co

36、rporate culture and strategy.We manage our own high-quality recycling services for both our own operations as well as for third-party customers,handling packaging waste,waste electricals and electronic equipment(“WEEE”)plastics and metals.“From order to delivery a positive experience.”LouiseAO World

37、 PLC Annual Report and Accounts 202405OverviewStrategic ReportOur GovernanceOur FinancialsShareholder InformationChairs statementI am pleased to report on a year of strong performance by AO with the Group achieving outstanding profits and finishing with an improved balance sheet,despite the generall

38、y challenging market conditions and reduced consumer spending.Our strategic pivot has been well executed by our management team and financial performance has been driven by(1)the relentless focus on our cost base and reduction of waste,(2)driving operational excellence and leveraging the benefits of

39、 being vertically integrated and(3)our unwavering obsession with customer satisfaction.Through our focus on retail fundamentals of price,availability and delivery execution,customer satisfaction remains market-leading and we are pleased to have maintained exceptional customer NPS and Trustpilot scor

40、es.AO.com achieved the significant milestone of half a million Trustpilot reviews and a 4.8 overall rating,maintaining our position as the UKs most trusted electrical retailer.Brand awareness continues to improve but remains a significant opportunity.We delivered outstanding PBT of 34m,up over 180%Y

41、OY,with revenue in line with our expectations at 1.04bn,down c.9%YOY.We have seen a 30m improvement in net funds YOY and ended the year with net funds on a pre IFRS16 basis of c.34m.We have also recently renewed our Revolving Credit Facility which will support our working capital cycles to April 202

42、7.We are now turning our focus to profitable growth and further strengthening the business.We ended FY24,with AO.com returning to revenue growth in the final quarter and we are investing in ways to ensure customers repeat purchase whilst attracting new customers to experience the AO Way.Strong perfo

43、rmance and solid foundations for growth“Through our focus on retail fundamentals of price,availability and delivery execution,customer satisfaction remains market-leading,which is reflected in our strong financial performance over the year.”Geoff CooperChairAO World PLC Annual Report and Accounts 20

44、2406This strong performance was delivered despite a particularly challenging year for the mobile phone market,with soft consumer demand placing pressure on our volume commitments to the networks and reducing profits from this market compared with our expectations.However,we have strengthened our mob

45、ile business during the year with the acquisition of intellectual property rights in and to the websites www.affordablemobiles.co.uk and which give us additional sales channels,and we are working with the networks to agree more mutually beneficial terms which we expect to deliver returns in the year

46、s ahead.We are investing in our people through pay increases(with some mid-year pay increases to our lower paid people and above inflation raises across the board in our recent annual pay review).We continue to invest in our systems;beginning some of the IT transformation work that we had to pause o

47、ver the last couple of years and invest further in sustainability initiatives including an extruder to further the refinement of plastics recycling at our facilities in Telford.Culture and peopleWe regard our internal culture as a fundamental driver of our success,and invest accordingly to nurture i

48、t.As part of our pivot to profit,actions to reduce costs and improve efficiency necessarily impacted our people.This compounded the degradation we had experienced in our culture during the remote working covid period.It has been a key priority over the year to help AOers come to terms with,understan

49、d,and appreciate the transformative changes we have made over the past 12-24 months.With listening groups and action groups addressing local issues at a granular level in each part of the Group,we have ensured employees appreciate that they have been listened to and involved in restoring our cultura

50、l strength.Key initiatives such as addressing pay challenges for our lower paid colleagues,investing in better car parking for all and improving the office environment and tools have all been welcomed.These actions have resulted in an average employee NPS score of 17 for the year which is a marked i

51、mprovement on last year and indicates that our culture is firmly back on track.We are working together cohesively,collaborating better than ever before with renewed determination and a winning ambition.Board Having served as a Non-Executive Director for over nine years,Marisa Cassoni retired in Sept

52、ember and we thank her for her significant contribution during her time with the Company,particularly for the skills and experience deployed as Chair of the Audit Committee.Appointed at IPO,Marisa was instrumental in helping the business transform its processes,procedures and controls from a private

53、 to a quoted company environment and did an excellent job in this.Marisas retirement required some changes to Committee leadership and membership and we were pleased to appoint Shaun McCabe to chair the Audit Committee and Peter Pritchard to chair the Remuneration Committee.Im pleased to confirm tha

54、t both have settled into their roles and are performing well.Through our evaluation of the Board and its committees I am confident that our ways of working are very effective and there is appropriate expertise around the table to effectively support and challenge our leadership team.For the year ahe

55、ad our board-specific objectives will focus on the skills required to deliver our longer-term strategy,succession planning and ensuring we have the right level of diversity of thought.I would like to give thanks to the Board,our Executives and all our people for their hard work and dedication throug

56、hout the year.Looking forward there are macroeconomic challenges ahead with continuing geopolitical uncertainty and political uncertainty in the UK.Our objectives,however,remain unchanged and we are confident in our ability to deliver on our ambition of double-digit revenue growth in the year ahead

57、and maintain the medium-term profit guidance of adjusted PBT margin of 5%.Geoff CooperChairRead more about customer focus on page 20AO World PLC Annual Report and Accounts 202407OverviewStrategic ReportOur GovernanceOur FinancialsShareholder InformationOur markets Impact:Consumers spending power is

58、impacted by a number of macro-economic factors.The Bank of England base rate of 5.25%1(as at May 2024)is the highest seen for over ten years.Higher rates act to suppress the housing market as well as impacting customers disposal income.Energy and fuel prices have starting to fall contributing to UK

59、inflationary pressures reducing in the year,with current price inflation at 2.3%,a 12 month low2.Wage inflation annual growth in regular earnings was 6%3 for the period January to March 2024.It is expected that this will be further impacted by the increase in the National Minimum Wage from April 202

60、44.Financial pressures on consumers has given rise to an increase in the demand for“Buy Now Pay Later”options when making major purchases.Our response:Forecasted falls in interest rates expected in 20245 should see the cost of borrowing and specifically mortgage rates fall,giving rise to increased b

61、uoyancy in the housing market.GFKs Consumer Confidence Index6 continues to increase with current levels at-19(April 2024),an 11 point swing from the low of this time last year.This is positive news and indicates green shoots in terms of consumer finances after the recent tough economic conditions.Ou

62、r range of over 7,000 products give our customers choice,so they can get the product they want at the price point that suits them.The majority of MDA sales are driven by distressed7 purchases thus providing AO with some resilience to macro-economic factors.Given forecasted decrease in interest rates

63、,the stabilisation of inflation levels and consumer confidence we would expect to start to see an upturn in discretionary consumer spending as a result.With our own in-house two person delivery fleet,fuel is a key component of our gross margin.As such we are currently finalising terms for the majori

64、ty of our fuel usage to an agreed fixed price for the financial year,providing AO with some short-term stability.We have two offices,five warehouses and 16 outbases,which all consume energy.Fixed price agreements are in place for 90%of usage until October 2026,giving some longer-term stability to op

65、erational costs.We recognise our employees are the ones who deliver our best-in-class service and as such all eligible AOers receiving a minimum 4%increase in basic pay in April 2024s pay review.AO offers customers access to a range of finance options to help fund their purchases,whether it be revol

66、ving credit or promotional instalment plans.The revolving credit adjusts rate and credit line to the individual customers profile,ensuring responsible lending and facilitating those needy purchases in a challenging economic landscape.AO act as Introducer in the distribution of AO Finance through New

67、Day,the product being regulated by the Financial Conduct Authority(“FCA”).Impact:Reliance on technology for purchasing is increasing,with over 55%8 of the electricals market now transacted online and expected to keep growing,retailers must adapt to market demand.Customers want a low touch purchasing

68、 journey via apps and Mobile browsers.Customers want to be able to compare products and brands as well as being able to choose services and delivery slots that meet their demands.Customers entrust their personal data including payment details with retailers.Increased Cybercrime has seen customers de

69、mand a higher level of cyber security when transacting online.There is rising demand for personalised experience and products.Customers are moving to subscriptions,membership and personalisation.Our response:Our website and app are designed to be simple,easy and empowering to use,ensuring that custo

70、mers can shop in the way that best suits them.We understand that todays customers not only want a hassle-free experience but also seek to make informed and personalised choices.We simplify the process of finding the right product through intuitive filters and popular search terms,as well as providin

71、g detailed information on energy ratings and sustainable products,enabling our customers to make responsible decisions.Our“My Account”feature offers a personalised experience,allowing customers to manage their orders effortlessly as well as track orders;providing peace of mind from purchase to deliv

72、ery.With over 7,000 electrical products available on our website,we give the customer a wide range of choice,by category and brand.Our in-house two-person delivery service enables customers to deal with us directly regarding time slots and services they require to make the delivery and installation

73、of their goods hassle free.AO continually invests in the online proposition through improved product visualisation and interactive product information,which enables a better digital journey for our customers.AOs operational gearing gives the business the ability to move with consumer demand with lim

74、ited investment required.AO has invested,and continues to invest in leading customer identity and access management technology to maintain the trust of our customers.Inflation,interest rates and consumer confidenceTechnology and the customer journeyAO World PLC Annual Report and Accounts 202408FY16F

75、Y17FY18FY19FY20FY21FY22FY23m353025151050FY242791423232425292828AO addressable market growth by year11 MDA SDA Personal Care AV CE Mobile Gaming Garden&DIY Smart Home LifestyleUK total electricals market 29.1bn11AO current UK addressable market 26.7bn11AO FY24 UK product sales 924.8m12Impact:There is

76、 an increased requirement for mandatory climate-related disclosures as recommended by the Task Force on Climate-related Financial Disclosures(“TCFD”).The pending implementation of IFRS S1 and S2 as set out by the International Sustainability Standards Board(“ISSB”)are all clear indications that corp

77、orate responsibility for the environment continues to be a clear directive.Consumers are becoming increasingly aware of energy costs and as a result are demanding more energy-efficient products.Almost half of consumers9 consider energy efficiency an important criterion when purchasing a MDA.Consumer

78、s are increasingly environmentally aware.1 in 410 consumers are prepared to pay more to protect biodiversity or for sustainable products and packaging.Our response:We understand the importance of aligning our purpose,values and strategy with the needs of our stakeholders to build long-term value in

79、a sustainable way.We see sustainability as an investment to stay relevant for customers,suppliers and our people,while driving down costs and realising efficiencies in our operations.AO is dedicated to responsible recycling and reuse.Since the inception of our in-house recycling plant we have recycl

80、ed or reused over 7m products.We continue to invest in our recycling facility,with the addition of an extruder planned for FY25.With over 800 vehicles on the road 364 days of the year we are continuously looking at ways to reduce our carbon footprint.In FY24 we invested in technology to make our rou

81、ting more efficient,both reducing our environmental impact and the cost of delivery.Along with our fleet partner we have launched our new semi-trailers which give a 10%increase in capacity per vehicle and will enable us to use compressed natural gas across the entire trunking fleet by 2030.Our websi

82、te with its detailed listing of product details empowers the customer to understand the environmental rating of the product they buy.Environment/Net Zero 1 bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate2 ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bu

83、lletins/averageweeklyearningsingreatbritain/may20244 gov.uk/government/publications/minimum-wage-rates-for-20245 Mintel,Major Domestic Appliances,UK Report 2022 62%8 Analysis of GFK data for the twelve months to 1 April 20249 GFK,gross value,for the twelve months to the 1 April 2024.Company data,gro

84、ss value12 Company data,net valueOur market y AOs current UK addressable market(which comprises MDA,SDA,AV consumer electronics,gaming,mobile garden and DIY,smart home and personal care)is 26.7bn.y AO remains a UK market leader in MDA,with 15.1%market share.y Online continues to present an opportuni

85、ty for growth,with over 55%of the total electricals market transacted online and forecasts of online penetration to increase,AO is perfectly placed to grow its market share.AO World PLC Annual Report and Accounts 202409OverviewStrategic ReportOur GovernanceOur FinancialsShareholder InformationWhat w

86、e do,how we do it and how we create value is best illustrated through our flywheel.This is how we will achieve our mission to be the destination for electricals.Key resourcesHow we create valueOur competitive advantageAn eco-system of expertise that informs the AO Way.Amazing serviceCustomer loyalty

87、Pivot to profitable growth235Invest and innovate4The destination for electricals1BrandThe UKs most trusted major electrical retail brand focused on customer service with a smile.Our Trustpilot ratings dont just happen by accident.Culture and peopleWe perform best when operating as One AO,working sma

88、rtly together,living our values and delivering with expertise.We live the service pledge every day and truly care about being better.Supplier partnershipsOur mission is to be the destination for electricals for all our trading partners.We want to tell their product stories brilliantly to help our cu

89、stomers get the best product for their needs.We always think long term and are passionate about building partnerships,not just buying products.TechnologyTechnology is,and always has been,integral to delivering a brilliant customer experience.We have a compelling customer proposition which we continu

90、e to invest in,to make our proposition better,faster and more convenient.Infrastructure interconnected servicesWe have end-to-end infrastructure including in-house logistics and recycling capabilities.We are a vertically integrated business that is united behind one mission,this is our One AO approa

91、ch.Read more in Our ecosystem of expertise on page 24AO World PLC Annual Report and Accounts 202410Value generated for:1&2.Customers are at the heart of our strategy.Everyone at AO is dedicated to giving our customers,both consumer and business,the best possible experience,from finding the right pro

92、duct at the right price,to frictionless delivery,installation and recycling,all with an AO smile.Its why were the most trusted.3.Once customers experience the AO Way to buy electricals,they return to us for other category purchases and additional services like installation and peace of mind warranti

93、es.They are proud to share their exceptional customer experience with family and friends,building our brand presence through personal recommendation and digital channels.4.Technology and innovation continually refresh and enhance our customer experience,operational efficiencies and competitive posit

94、ioning.Rising profits will give us choices and create a virtuous circle of investment,innovation and customer satisfaction.5.As we build scale,our operational gearing means that each sale becomes increasingly profitable.Our commercial partnerships deepen,resulting in further enhancement of our custo

95、mer experience in choice,pricing and services.The marginal costs of delivery,installation and recycling all decrease,boosting profits for reinvestment.We can then choose to fund further investment in our other businesses,including recycling,mobile,B2B,logistics,financial services and in brand develo

96、pment.These feed back into enhancing our customer experience,as well as underpinning our investment in technology.How we create valueObsessing about customers,behaving as One AO,united behind the same mission are the foundations of value creation.The virtuous circle driven by customer focus,operatio

97、nal leverage and profitability underpin longer-term growth ambitions through broadening our product offerings,expanding our customer experience into new markets and applying continuous innovation to the digital experience.This is what makes our flywheel fly and is how we create value for all our sta

98、keholders.Customers The products we sell are essential in their lives and are major purchases.Getting the perfect product in a friction-free way with a little bit of fun is the best way to serve.PeopleWe spend the majority of our awake lives at work and so it should be enjoyable.Our people are able

99、to be the best versions of themselves at AO.We create the environment for them to grow and flourish.SuppliersWe want to leverage the capability we have created for our suppliers to tell their own product stories brilliantly to our customers.We care about creating value from their products and long-t

100、erm brand relationships for our mutual customers.We are also proud to disrupt thinking and help our trading partners be ever better for customers.CommunitiesWe care about the communities in which we operate and the world more widely.We take our responsibilities seriously and make decisions that make

101、 our mums proud.Whether through the work of the AO Smile Foundation or simply paying fair taxes,we know its often the spirit that matters.EnvironmentThrough our vertically integrated supply chain we can ensure both disposal and recycling of electricals and packaging and by collecting these as part o

102、f our delivery process we reduce carbon emissions on transportation and help appliances stay out of landfill.Shareholders We take a long-term view to build value in our business.We are entrepreneurial,looking for new ways to connect with our customers and drive growth by investing in new products,se

103、rvices and markets.We have the ability to scale through our vertically integrated model creating value through operating leverage.Read more in our Section 172 statement on pages 50 to 53AO World PLC Annual Report and Accounts 202411OverviewStrategic ReportOur GovernanceOur FinancialsShareholder Info

104、rmationWhat matters to usOur suppliersOur suppliers are essential partners in helping us delight customers.A consistent,exceptional customer experience in product choice,delivery and installation,recycling and additional services is what sets us apart and results in our outstanding Trustpilot score

105、year after year.We enjoy a collaborative relationship with our supplier ecosystem,building trust and long-term relationships.Through regular meetings with our suppliers,we have developed a deep understanding of their strategic and operational context and can establish high-quality service level agre

106、ements to ensure suppliers can meet our expectations and those of our customers.This may manifest itself differently across our business units;for example,manufacturer suppliers supporting the formalisation of our B2B offering or the collaborative approach undertaken with suppliers for the design an

107、d build of our Recycling and Plastics plants.Our relationships with our suppliers are extremely important as we seek to develop new opportunities,driving value as part of a two-way relationship.We work with a range of suppliers,from globally recognised manufacturers and international mobile network

108、operators to national parcel delivery services,individual contracted drivers and small local businesses who provide the two-man home delivery service for our products.We also work with DPD,to whom we outsource smaller product deliveries,NewDay,our credit provider and finance partner,and Domestic&Gen

109、eral,for whom we promote product protection plans as their agent.AO World PLC Annual Report and Accounts 202412Corporate partnersWe work with several corporate entities to supply ancillary services including product protection plans,services,customer financing and mobile network contracts.Our Mobile

110、 business offers a range of mobile phone contracts with the network operators Vodafone,O2 and Three,and handsets from manufacturers such as Apple,Samsung,and Google.Mobiles are an indispensable product for most of our customers and add an important customer touchpoint and entry into our wider produc

111、t range.AO Finance has been provided through NewDay since 2019,offering customers the ability to spread the cost of their purchases through easy and affordable payment options using a flexible finance account.Customers have access to a range of finance options to help fund their purchases,whether it

112、 be revolving credit or promotional instalment plans.The revolving credit adjusts rate and credit line to the individual customers profile,ensuring responsible lending and facilitating those needy purchases in a challenging economic landscape.AO acts as Introducer in the distribution of AO Finance t

113、hrough NewDay,regulated by the FCA.AO Care is provided through Domestic&General,a trusted provider of service plans and insurances for millions of domestic appliances,and the UKs leading provider of appliance breakdown protection.AO has worked with Domestic&General since 2004,as its agent,and AO Car

114、e provides peace of mind for our customers by ensuring their essential electricals are protected with a plan that goes beyond basic manufacturer guarantees and consumer rights legislation;all important when customers are budgeting against a tough economic landscape.AO Care includes accidental damage

115、 cover and access to an accredited network of expert engineers who provide high-quality repairs with the right parts and no hidden costs;and as an insurance policy,customers can be confident that their plan is regulated by the Financial Conduct Authority(“FCA”).Our recycling facilities are amongst t

116、he most advanced in the UK,constantly innovating and improving our cradle-to-cradle customer experience.We constantly seek to improve our best-in-class recycling facilities through partnerships and third-party providers of significant plant and infrastructure to meet our high standards.Manufacturer

117、suppliersCustomers begin their journey with us when they search our websites for product information,pricing and range of features.We have long-standing relationships with all the leading global manufacturers of MDA products,who help us provide customers with a wide range of products to suit all cus

118、tomers.During recent uncertainty as a result of geopolitical issues,our close relationships with manufacturers remained strong and consistent,allowing us to maintain good stock levels to meet customer demand.Our partnerships with our manufacturer suppliers go deeper than just product distribution.We

119、 are working with manufacturers and third parties on innovation in recycling,turning waste plastic into new high-quality product components such as base plates,ducts,grill covers and connectors as part of our cradle-to-cradle approach to recycling and sustainability.Product delivery and installation

120、Contracted drivers and delivery crews are the face of AO when they visit our customers and,as with all our suppliers,we expect them to deliver great service.Many of the drivers are supplied by multi-crew businesses.In return,they receive competitive market rates and have the opportunity to grow thei

121、r own businesses.Our Five Star driver programme allows the best drivers to share in the value we create for customers.AO World PLC Annual Report and Accounts 202413OverviewStrategic ReportOur GovernanceOur FinancialsShareholder InformationWhat matters to us continuedOur Culture“I would recommend wor

122、king at AO to anyone.The people make it the business it is,with a strong culture.Its clear AO has actively listened to staff.”An AOer14AO World PLC Annual Report and Accounts 2024AOs success is a team effort underpinned by our values.Whether thats our financial performance or our market leading Trus

123、tpilot rating with over half a million customer reviews and a 4.8 trust score,every AOer positively impacts our results.Its what makes AO the most trusted electrical retailer.To sustain and develop a special team requires a unique culture which,having nurtured it for 24 years,proved resilient to the

124、 turbulence of 2022.By listening to our people and acting on their feedback wherever practical,AOers tell us through regular measurement surveys that employee satisfaction has significantly increased.Actions we took include upgrading tools and technology in our warehouses,introducing regular trainin

125、g days for logistics teams,adding more secure lockers in recycling,refreshing and creating more meeting spaces in our offices,investing in on-site car parking for all AOers based in Bolton and making mid-year pay awards for our lowest paid people.The positive impact of these is also reflected in gre

126、atly reduced labour turnover and increased retention during the year.Culturally,working from work is great for AO and our retention data shows that its also proven to be a positive move for our people.After re-introducing our“work from work”policy in February 2023,weve subsequently added informal fl

127、exibility with up to ten working from home days where business need allows.Weve always prided ourselves on promoting from within,with a“skys the limit”culture for those who want to develop their career at AO.Having had limited opportunities for development last year,were particularly pleased with th

128、e significant strides weve made in learning and development.From investing in skills banding and true career development in our Customer Experience function to our Women In Leadership apprenticeships to our nine month STAR Programme that focuses on growing capability,skills,and knowledge for our eme

129、rging talent across the business as well as opportunities to deliver real-life business projects,aligned to our business priorities.Although we believe aspects of the governments Apprenticeship Levy need urgent reform,its been an area of focus for our learning strategy.We have made the most of it in

130、 its current form with 92%utilisation of our contribution,90 active learners and 4.5%participation.Our continued focus on our values,listening,acting and developing our people is underpinned by our drive to inspire our people through great leadership,creating trust and accountability.All of which en

131、ables us to deliver exceptional results,with every AOer incentivised by our unique AO All Employee Value Creation Plan.AO World PLC Annual Report and Accounts 202415OverviewStrategic ReportOur GovernanceOur FinancialsShareholder InformationWe have a growth mindset Creativit.Y and thinking big is wha

132、t we do.Were a high performing team;alwa,Ys learning and stretching.We challenge ourselves to seek better wa,Ys of doings things.We see opportunities others dont,and thinking differentl.Y strengthens our future.What matters to us continuedOur valuesAO World PLC Annual Report and Accounts 202416We ma

133、ke decisions that make our mums proud We empower our people to make the right decisions,not necessaril.Y the eas,Y ones.We inspire each other to be our true selves and the best that we can be.We genuinel,Y care,we listen to each other,and we do ever,Ything we can to make things better.Having a posit

134、ive impact on the world in which we live is the right thing to do.AO World PLC Annual Report and Accounts 202417OverviewStrategic ReportOur GovernanceOur FinancialsShareholder InformationWhat matters to us continuedOur brandBeing famous,trusted and loved is at the heart of our brand strategy,driving

135、 everything we do.Were focused on leading and orchestrating the brand strategy,marketing and sponsorship to help us achieve our ambition of becoming the destination for electricals and one of the UKs most trusted retailers.Throughout FY24,we invested strategically to fuel growth and enhance customer

136、 engagement.From consistent and engaging above the line activity to exciting activations across our key sponsorships,and category-first test and learn in social,weve seen improvements across all our key metrics.Brand positioningWere laser-focused on building on our position in the market as the UKs

137、most trusted electrical retailer.We strive to be memorable in the moments that matter,impress with our amazing customer service,all while oozing our“Always On”AO personality.Our brand is all about being reliable,honest,and transparent with our customers.We remain that trustworthy smile in a world of

138、 uncertainty.SponsorshipThe core of our sponsorship strategy remains to amplify brand awareness by placing AO in front of as many consumers as possible and creating exciting moments to talk about.Key sponsorships in the North West,such as the AO Arena,Sale Sharks,and Manchester Thunder continue to d

139、eliver positive sentiment and engage fans across diverse demographics.Notably,the AO Arena sponsorship has seen a boost in awareness this year.During our“Summer of Smiles”campaign,our bright green AO bus travelled to events up and down the country,inviting people to groove to the music in our very o

140、wn AO Kitchen Disco made up of a selection of our key product range.We became a principal partner of SoccerAid,integrating our branding into one of the years top sporting events.Through compelling content and activations,we reached millions of viewers and achieved our most viral tweet to date,furthe

141、r establishing our national presence.AO World PLC Annual Report and Accounts 202418Our grassroots initiatives continue,driven by our belief that talent is evenly distributed.Weve maintained our long-term relationship with Bolton Lads and Girls Club,and supported over 450 children nationwide through

142、our multi-sport programme,where AOers nominated junior teams for kit sponsorship.Furthermore,recognising the rising popularity of the NFL,were thrilled to be the“Official Partner of the Jacksonville Jaguars UK”.Together,were excited to launch a nationwide initiative introducing American football to

143、90,000 children annually through the Jag Tags program,each of the participants wearing co-branded AO kit.MarketingOur journey to become one of the UKs most trusted brands continues,following further investment in brand advertising.Our commitment to implementing both long-term brand building strategi

144、es and shorter-term acquisition tactics remains steadfast.Were dedicated to attracting new customers,while simultaneously captivating and retaining our existing customer base.In FY24 we amplified our“UKs most trusted electrical retailer”message through advertising.This saw us reaching our highest le

145、vel of spontaneous awareness ever.Social mediaSocial continues to be an important part of our marketing strategy,with over two million followers across our platforms.This year we strengthened our investment into organic social activity to drive trust,refined and optimised our paid social activity to

146、 drive maximum impact and expanded our commitment to social commerce.We continued to focus on Facebook Live,a live shopping event where AO presenters talk about our product range and deals,and viewers are directed to purchase from .Secondly,we launched on TikTok Shop,making us the first major electr

147、ical retailer on the platform.Leveraging the platforms immense reach and popularity amongst younger demographics,we showcased AO as the destination for electricals,and became the first brand to deliver a large appliance through the TikTok Shop!AO World PLC Annual Report and Accounts 202419OverviewSt

148、rategic ReportOur GovernanceOur FinancialsShareholder InformationWhat matters to uscontinuedOur customer followers on social mediaTotal followers4 FY23 Facebook1.87mFY23:1.88m X89kFY23:92k Instagram82kFY23:82k YouTube28kFY23:27k TikTok74kFY23:70k Pinterest10kFY23:10k Total 4.7m FY23:4.7mUK Trustpilo

149、t FY24 TrustpilotTotal reviews532kFY23:394kAverage FY24 Rating 4.8/5 FY23:4.6/54 Correct as at 18/04/24New customers vs repeat customers1%Customer number70%60%50%40%30%20%10%0%FY24FY24Q1Q3FY11FY12FY11FY12FY13FY14FY14FY15FY15FY16FY17FY16FY17FY18FY18FY19FY19FY20FY20FY13FY21FY21Q1Q3Q3Q1Q3Q1Q3Q1Q1 Q3Q1Q

150、3Q3Q1Q3 Q1Q3Q1Q3Q1 Q3FY22FY22Q1Q3FY23FY23Q1Q3Q1 Cumulative Customers3 (000s)14,00012,00010,0008,0006,0004,0002,0000FY14FY15FY16FY17FY18FY19FY20FY21FY22FY23FY24 Net Promoter Score(1)FY24 83(2)FY23:851 NPS is a measure of customer loyalty and satisfaction2 Rounded.Based on a weighted average of and MP

151、D responses3 A customer is defined as an individual customer who has purchased via The AO smile is more than a logo,its how we make customers feel in every interaction with us.Thats why customers come back again and again.First order time New Repeat Repeat%AO World PLC Annual Report and Accounts 202

152、420OverviewStrategic ReportOur GovernanceOur FinancialsShareholder Information21AO World PLC Annual Report and Accounts 2024What matters to us continuedOur technologyOur technology architecture continues to develop as more of the market moves online and our customer offering expands.Technology knits

153、 together the various stages of the customer journey and our supply chain to ensure we can deliver the best possible experience to our customers as well as providing a high-quality environment that showcases our partners offering.Manufacturers still consider digital an integral brand environment for

154、 new and popular products and providing a quality online environment for their products is one of our objectives.We regularly collaborate with our partners and suppliers to ensure that our stock levels and customer demand are matched to ensure we meet our commitment for next day delivery.We sweep th

155、e market multiple times per day to ensure that our prices are competitive and continually improve our customer proposition through additional delivery capacity,payment options and more services such as customer financing,warranties and proprietary recycling.An efficient technology architecture also

156、allows us to serve both our retail and corporate customers,supporting our B2B and Third-Party Logistics(“3PL”)operations,which enables us to leverage our operational gearing,delivering cost efficiencies.Our current core technology systems are a blend of commercial off-the-shelf and custom-built comp

157、onents.This affords us an agile,highly configurable enterprise technology estate that is also integrated with our key suppliers,with a shared ownership model for integrations.We continue to build and enhance our model.From our website navigation structure to our customer insights that inform custome

158、r choice,to our logistics network,our technology infrastructure underpins our business.It ensures that our logistics network performs seamlessly between our suppliers and our customers.AO World PLC Annual Report and Accounts 202422Technology is,and always has been,at the heart of our focus on delive

159、ring a brilliant customer experience.Year in reviewThis year we further progressed our multi-year strategy to invest and develop further our architecture,focusing on enhancing our customer proposition and experience,e-commerce business systems and leveraging data through advanced analytics.During th

160、e year,we improved our cyber security posture,replaced our logistics routing and e-commerce search platforms with market-leading Enterprise SaaS solutions and completed several strategic integrations to diversify our supply chain.In addition,we successfully delivered the first of three phases of our

161、 ERP transformation programme.Our medium-term strategy remains to migrate undifferentiated and generic applications onto established enterprise platforms to create a stable and efficient foundation for future growth,while maintaining the flexibility of our custom-built components to continue to push

162、 the boundaries.Priorities for FY25This year will see us begin the second phase of our Enterprise Resource Planning transformation,which will ultimately streamline our business operations and give us a solid foundation for future growth.We will continue our application modernisation agenda,replacing

163、 other key systems such as our Contact Centre platform,which will help us to further digitalise and enhance our customers post-sales experience.Information is vital to the effective and efficient operation of our business and,as such,this year we will continue to enhance business decisions across th

164、e business using advanced analytics,machine learning and artificial intelligence.Technology will also play a key role in enhancing customer experience,through increased personalisation of experience and creation of value-added experiences and propositions.AO World PLC Annual Report and Accounts 2024

165、23OverviewStrategic ReportOur GovernanceOur FinancialsShareholder InformationWhat matters to us continuedProduct+Content+TechWebshopWarranty and financeLogisticsCustomers houseWasteRecyclingResaleReuse of plastics back into productsOur ecosystem of expertise and services Our eco-system is a range of

166、 our expertise and services from across retail and logistics through to financial services and our very own recycling plant.Our customers are at the heart of everything we do and thats why we are constantly evolving our eco-system to meet market demand and ensure we achieve our mission.Its not about

167、 what we do though,its how we do it.Product From fridges and freezers,laundry products and dishwashers,to smart tech,computing and tv and entertainment.We sell over 7,000 products on our multiple e-commerce platforms,all at a competitive price.Content Our multimedia team produce our in-house diverse

168、 content,which includes imagery,videos,how to guides and lifestyle,and energy efficiency ratings.Tech Our bespoke shop functionality and pricing tools,enable us to sweep the market several times a day to keep our prices competitive.Our My Account functionality enables customers to order,review and m

169、ake changes to their orders up to the day of delivery.Warranty and finance We work with Domestic and General(the UKs leading specialist warranty provider)to offer our customers a product protection plan to provide them with the peace of mind that their new product could be repaired or replaced if re

170、quired.On behalf of NewDay,we promote a range of credit products at competitive rates,but also use 0%interest free offerings and buy now pay later for promotional purposes;we ensure adherence to responsible lending practices and provide simple and clear finance options for our customers.Our in-house

171、 Logistics network comprises five distribution centres,with a total of over 1.4m sq ft,16 delivery depots and around 800 trucks and 300 trailers,we are able to offer nationwide delivery seven days a week with dynamic timeslots and next day options.Webshop supported by our contact centreCustomers hou

172、se our services include the basics of unpacking and inspecting customers products,to complex gas cooking and integrated installations we go the extra mile.Resale Where its possible to do so,we will look to resell any products scrapped by our customers via our own third-party outlets.Recycling Our pu

173、rpose-built,state-of-the-art WEEE(Waste Electrical and Electronic Equipment)and plastics recycling facilities in Telford.Our vertically integrated WEEE recycling facility recycles well over one million large domestic appliances annually,with over 50%of these being recycled by Bertha(our fridge shred

174、ding machine).Plastics from Bertha are refined using our AO designed plastics recycling plant(with annual capacity of 25,000 tonnes),creating high-quality consistent plastics for reuse in new products and appliances.AO World PLC Annual Report and Accounts 202424Summary Offices x 3 Outbase x 16 Wareh

175、ouses x 5 Recycling PlantAO World PLC Annual Report and Accounts 202425OverviewStrategic ReportOur GovernanceOur FinancialsShareholder Information1AcquisitionWe are a leading online retailer of major domestic appliances and we have a great repeat customer rate.But we need to ensure that:y We have a

176、strong brand identity,which remains relevant in todays climate;y We stay at the forefront of digital acquisition techniques;and y We create reasons for customers to come back to us time and time again to shop for appliances and also our newer categories,increasing share of wallet.Our strategyOur str

177、ategy is to leverage our market-leading customer proposition and scale in order to achieve our mission.2 Brilliant customer journeyDelivering a brilliant customer experience and creating a seamless shopping experience is all about having:y A slick,intuitive and engaging website,with excellent and in

178、spiring product information,the ability to easily add supporting services and“add-on”products and with a choice of payment options;y Self-serve options to amend orders post purchase;y Support from a friendly team on the phone where needed;and y Making it right when things go wrong(which they occasio

179、nally do with such big stuff!).3 Comprehensive category coverage at great pricesThrough expanding our product ranges,we will position AO as the destination for electricals,serving the widest possible customer base.We need to ensure that we are offering great prices to customers,while maintaining app

180、ropriate levels of margin to meet our financial targets.AO World PLC Annual Report and Accounts 202426By focusing on these strategic objectives and our culture and values,we can fulfil our purpose and strive towards our mission.We treat every customer like our granWe make decisions that make our mum

181、s proudWe have a growth mindsetWe operate at AO speedTo fulfil our purpose:To make customers lives easier by helping them brilliantlyFor progress against these objectives,please refer to the CEO and CFO reviews.Throughout the year,we have pivoted the strategy to focus on our leading online position

182、in the UK electricals market and optimising the Groups profit and cash generation potential.In the medium-term,our ambition is to achieve double digit revenue growth and adjusted PBT margin of 5%.To achieve these ambitions and ultimately our mission we have five key strategic objectives as set out b

183、elow.4 Delivering supporting servicesAO is known for outstanding service and we need to maintain and enhance this by:y Offering a full range of services,for both existing and new categories;y Improving our best-in-class delivery,easy returns,product installation and set-up,and recycling propositions

184、;and y Enhancing the customer lifecycle through services such as warranties,repair and maintenance and product trade-ins in relevant categories.5 Efficiencies and expertiseWe have a number of centres of expertise throughout the business and we aim to leverage these and our operating model to enhance

185、 and grow the business but without adding additional complexity.A more focused approach on our opportunities,whether it be through other retail categories,B2B,3PL,or recycling,provides economies of scale,which can help us achieve revenue growth and our profit and cash targets.We will also continue t

186、o drive efficiencies and reduce“waste”in our operations.AO World PLC Annual Report and Accounts 202427OverviewStrategic ReportOur GovernanceOur FinancialsShareholder InformationChief Executive OfficersStrategic ReviewWe began the 2024 financial year with the majority of the heavy lifting of our pivo

187、t to profit complete and we began to see the benefits in our financial performance.While theres more to be realised over time through optimisation,the bulk of the step change is now complete and our primary driver of increased profit will be through our targeted top line growth and associated operat

188、ional gearing.Our medium-term ambition and confidence remain unchanged.Our intuition at the beginning of the pivot proved through the year to be broadly accurate.That is to say the combined effect of all the actions taken would leave us with a business with sales over 1bn and profit in the region of

189、 3%PBT,all converting to cash.This was planned to be our base and a platform from which to grow sales again,as we annualised our actions,and grow profits faster than sales.We end the year with a much simpler business,in a steady state,performing better than ever for customers and with our best unit

190、economics.Our relentless obsession with simplicity continues to build a platform with significant structural cost and service advantages.We have passed the milestone of going from 400,000 Trustpilot reviews last year to over half a million.At the same time,we have increased our overall Trustpilot sc

191、ore from 4.6/5 to 4.8/5.We are now the most trusted electrical retailer at scale“We end the year with a much simpler business,in a steady state,performing better than ever for customers and with our best unit economics.Our relentless obsession with simplicity continues to build a platform with signi

192、ficant structural cost and service advantages.”John RobertsChief Executive OfficerAO World PLC Annual Report and Accounts 202428This might look a small step but not when you consider how many 5/5 reviews are required to move the needle.This ranks us as the top Trustpilot retailer in the UK and one o

193、f the top three globally for the combination of number of reviews and rating scale.Quite an achievement for an electrical retailer selling products at scale,which are largely distress purchases,high life impact when they fail,low frequency and mainly requiring two-man home delivery.Its about as toug

194、h as it gets and is a massive tribute to the hard work,passion,commitment and excellence of our people.Both quality and quantity have their own inherent values in different circumstances but the compounding value of both together is material.In electrical retail where purchase frequency is low relat

195、ive to that of grocery shopping,that value takes time to be realised.Brand and trust take longer to build and yet the required trust hurdle for a major purchase is higher.All structural disadvantages to the incumbent well established bricks and mortar retailers that we have steadily and patiently er

196、oded over time.We can feel our brand getting more traction through both sentiment and repeat order metrics every year.We are now the most trusted electrical retailer at scale.Ive been saying for many years that our model is fundamentally structurally more efficient and that the markets direction of

197、travel was towards our model not away from it.Covid accelerated this shift to online on a three year view,and with the step back after the spike up,online still retains more than half the market.Through that three year period we have touched almost three million more customers for the first time to

198、lay brand foundations with them through their experience and add fuel to our future flywheel.While we dont release the data in micro detail and it might seem obvious,its worth saying;when you impress new customers with amazing service,theyre more likely to shop with you in the future.Retail is not r

199、eally that complicated when viewed from first principles;help people to easily choose the right product,have it in stock and available for immediate delivery to suit the customers convenience,be the cheapest place to buy it and then deliver it on time and make that experience really nice,memorable a

200、nd ideally with personality.Then if anything ever goes wrong treat customers like you would your own gran.By removing grit and complication during the last financial year,weve created time for a renewed focus on every metric and input that brings that simplicity to life and Im delighted to say that

201、weve improved every single measure through the year.Obsession means we will continue to be restless and our steady state means were able to now get into ever greater levels of detail.The best service is,and always has been,no service;it should just work.Its also the most profitable service because a

202、ll interventions cost money.We have real conviction that these first principles of brilliant retail in electricals are unlikely to change in the medium term,which gives us real confidence to continue to invest deeply in them and the structural advantage they then produce over time through the trust

203、generated.Overarching all of this is the value of time.It is now ten years since we did our IPO,which was 14 years after we started trading.This is relevant because of the 10,000 hours principle derived from the research of Anders Ericsson.He found that achieving world class expertise required delib

204、erate practice for 10,000 hours,or around ten years.To be clear,very few ever achieve this level of expertise because just doing something for ten years doesnt mean it happens.You have to obsess about it,try harder,go further,push every boundary,invent,create,imagine,fail,learn and apply consistentl

205、y for 10,000 hours.Sometimes youll have setbacks and have to roll with the punches,pick yourself up and double down on your efforts.Often the danger zone is when you think youre good and people tell you youre good and you have to find new ways to reset the bar so that your metrics today make you loo

206、k awful again and so the process can begin again.Everything big started as something small and most new businesses fail.The early years of discovery really werent included in these timings.It was when we signed our first white label operation with Sainsburys back in 2003 that we HAD to become brilli

207、ant for customers rather than just sell them stuff at a price discount.We then spent 10,000 hours to IPO doing exactly that and launched an IPO while mainly selling white goods/MDA.Since then,weve been learning how to transition to being a full service electrical retailer.It hasnt been without its t

208、rials,barriers and prejudice so I think we are still two to three years behind schedule on being as good in newer categories as we are in MDA.Were at different levels of development in each category as well.For example,weve only been in mobile phones for five years.We have also learned some expensiv

209、e lessons in Germany and some less expensive ones in different business channels.All valuable and well carry those learnings forward.We also acquired certain assets of A1 Communications(in administration)in the year.This was done very quickly on a low risk and potentially high reward basis.Were plea

210、sed so far with what we have seen.Read more about culture on page 15AO World PLC Annual Report and Accounts 202429OverviewStrategic ReportOur GovernanceOur FinancialsShareholder InformationThe journey continues and the compounding nature of obsessively getting better,for a bigger customer base who r

211、epeat more,tell more people,come back more directly,give us more share of their wallet as they understand that we sell more products drives both sales and profit.Were still in the early stages of learning the value of these dynamics,how to best drive them and how to deepen our relationship with cust

212、omers but everything we see is exciting and underpins our optimism for the future.We dont release data on this because they are far too commercially sensitive.Our economic model though means that the growth we drive from this leverages our central fixed overhead,currently about 11%of sales.This then

213、 enables us to re-invest this gearing in the proposition for customers on a shared economics basis.On the horizon we continue to face into economic and technological challenges and opportunities.On the challenges front,were entering an election year and instability is rarely good,while macro-economi

214、c consumer spending challenges still exist but are easing.We also have continued unpredictable supply chain issues to manage as a result of global impacts outside of our control.We do though remain excited.The wider market remains at historical lows in volume terms because of the amount pulled forwa

215、rd into the Covid lockdown period where MDA volumes in 2020 were c.25%above todays level and were around 17%higher in 2021.Our planning assumes todays volume continues but we are now four years from the start of that spike and,even with the longer product purchase cycle that electricals have,it woul

216、d be sensible to assume some tailwinds from the replacement cycles of those covid peaks in the not too distant future.Competitively,our bricks and mortar competitors now have an ever increasing amount of their business transacted online.The reality though,is that they now have to operate a significa

217、nt online business in an incredibly competitive,service transparent arena requiring different skill sets,as well as bearing the costs of maintaining a store estate and associated staff costs including living wage increases.They still hold a lead on us with brand awareness,scale and habit but that is

218、 diminishing as set out above and our quality is gradually shining through.You normally get the reputation you deserve in the end.Technology offers both opportunity and protection through the AI revolution.From a risk perspective,I see it as some time before anyone will not need the majority of what

219、 we sell to be in physical form.They wont download or digitally print a fridge freezer and so will need it to be physically delivered to their homes.Being a great destination for information and choice for customers coupled with a lowest cost supply chain also makes us a great partner for brands at

220、great value for selling their innovations in a cost effective way.AI presents wonderful opportunities for an ever more intuitive and personalised customer journey,better insights from customer data to help us serve them better.A lot of rhetoric revolves around cost savings normally through the reduc

221、tion of headcount but our focus is to make the customer journey so good and the execution so perfect that we remove as much as possible through excellence rather than automation of what went wrong.We always intend to be there in person for customers that need us.What is certain with AI is that scale

222、 matters and so having big data sets and the ability to be super granular in application is key.This is a journey not a light switch and one we are excited to be able to build on our solid fundamentals.While we know that investors would love to see all the data that supports our confidence,we think

223、it more prudent to just let the results speak for themselves over time.I am though,delighted to confirm we are back to growth in Q4 as predicted and weve finished the year over the 5%EBITDA we forecast as we transition to the more meaningful measure of PBT.We reiterate with confidence a business in

224、the year ahead back to a double digit growth converting towards and beyond our medium-term PBT target of 5%and having it all manifest in good old fashioned cash.Well continue to develop our thoughts on capital allocation as the choices become available to us through that cash build.None of this has

225、happened by accident or in isolation.All AOers have worked tirelessly to realise this performance and I would like to thank them all.Its great our Value Creation Plan,that our whole workforce benefit from,is on plan.Our suppliers have been patient and supportive through the required leaps of faith d

226、uring our pivot.When it would have been easy to penalise us for sales decline and make the hill steeper,the vast majority have done the opposite and been right behind us,blowing wind in our sails.I believe this is the repayment of two decades of being a partner not pugnacious.We travelled the Covid

227、crisis together in lots of ways and Im hugely grateful to them for their support in the moments that mattered.And finally,our shareholders.The broad stability,support and concentration we enjoy has been one distraction off the list to allow us the time to deliver value in return and we look forward

228、to getting on with that job in a,hopefully,predictably boring manner.John RobertsChief Executive OfficerChief Executive OfficersStrategic Review continuedAO World PLC Annual Report and Accounts 202430AO World PLC Annual Report and Accounts 202431OverviewStrategic ReportOur GovernanceOur FinancialsSh

229、areholder InformationChief Financial Officers ReviewWe now move towards growing the business profitably,continuing to invest in growing our already significant customer base,through our brand spend.Our impressive Trustpilot rating(4.8/5)demonstrates that our large customer base is consistently delig

230、hted by our service.The well documented pressures on the UK consumer have inevitably impacted demand in the electricals market,however,our core business of MDA which represents about 60%of our total revenue remains robust.Our near-term priorities remain the same;to deliver double-digit growth in rev

231、enue,control and leverage our costs with growth towards a 5%PBT target,and to convert those profits to cash.Our pivot to profit along with feedback from shareholders has seen us move our focus away from EBITDA to a headline profit measure of adjusted PBT.Operational highlightsUK retailOur UK retail

232、business is one of the market leaders in MDA retailing,generating strong and sustainable cash flows.We serve customers through both B2B and B2C channels.Established over 20 years ago,we offer a comprehensive range of MDA products complemented by smaller domestic appliances,computing,AV,mobile phones

233、,consumer electronics,gaming and smart home products.Our UK website,is the cornerstone of our retail operations and often serves as a customers first introduction to our exceptional customer service,extensive product range and competitive pricing.We are committed to enhancing the customer experience

234、 through improved product Successfully pivoting the business to strong profitable performance.“The results for the financial year ended March 2024 demonstrate the impact of the pivot to profit initiative that we began midway through FY23 and I am delighted to see the progress we have made.”Mark Higg

235、ins Chief Financial OfficerAO World PLC Annual Report and Accounts 202432Read more about our financial KPIs on page 03information,diverse payment options,flexible delivery and installation options,and recycling services.By continuously monitoring the market,we maintain competitive pricing.This year,

236、over 600,000 new customers experienced the AO Way,bringing the total historical customer base on to 12 million.Of the customers who shopped with us during FY24,over 54%were repeat.We continue to report market-leading customer satisfaction scores with a Trustpilot rating of 4.8/5,on over 500,000 revi

237、ews.This reflects our unwavering commitment to outstanding service and customer satisfaction,which has been fully maintained despite our pivot to profit and cash.As we have re-based our profitability metrics,we are now focusing on driving revenue growth and profitability in product categories in whi

238、ch we can leverage our whole ecosystem and deliver the right return.We have now annualised delivery charges on all deliveries in order to help mitigate increasing delivery costs.As we expected,the actions we have taken have impacted our overall MDA market share which,fell 0.7%to 15.1%,which is level

239、 that gives us plenty of opportunity to return to growth.In order to drive new customers to our website and ensure customers return,we must maintain and improve our brand awareness.Advertising and marketing spend has continued to shift from acquisition spend,with its immediate transaction link,to br

240、and investment-with its expected longer-term benefits.Our consistent great customer service,coupled with our brand investment,has delivered growth in two of our key metrics-Fame(i.e.spontaneous awareness)and Trust(i.e.“retailer I trust”and“retailer I would consider first”)this year.The significant o

241、verhead savings,as we simplified the business,were made in the previous financial year(FY23).Nonetheless,we continued to focus on operational efficiencies and saw some of the benefits of the annualisation of property rationalisation,especially in our logistics business.There has,however,been a lag i

242、n the increase of some cost,where inflationary pressures continue.We have seen this as we exit FY24 and enter FY25,with government policy on minimum wage driving high wage inflation in lower paid operation roles.Our Financial Services business performed resiliently as our customers continue to recog

243、nise the value and peace of mind that our product protection plans offer.We have experienced a reduction in the cancellation rates of plans during the period,which positively impacted profitability this year.We have noted the FCAs consultation on legislation aiming to reduce fraud rates for consumer

244、 financial service products and will work with our long-term partner Domestic&General(AO Care)to accommodate any changes in our model,should a change in legislation require them.Towards the end of the period,we have worked particularly closely with our Customer Finance partner,NewDay,and have looked

245、 to deliver a range of options for our customers.MobileAO Mobile(Mobile Phones Direct)has had a challenging year.The new contract mobile phone market has been challenging,with depressed consumer demand placing pressure on our volume commitments to networks,with the total new contract market down 14%

246、YoY.With a suppressed market,competition for customers was intense,leading to increased investment in the acquisition of customers through affiliate channels and unsustainable discounts to win market share.The losses incurred prompted a strategic reassessment of our approach to the mobile market,as

247、the then status quo was unsustainable.As we entered 2024,with a revised approach to our model,we continue to focus on customer proposition with traditional network contract connections for our network partners,Three,Vodafone and O2.Our strategy is to be affordable,providing value for money offers,co

248、nnecting through robust eligibility gateways,and appeal to a customer base in the market to find the best tariff for them,all while being profitable for AO.Mobile continues to form an important part of the strategy for AO as we look to sell a full range of electricals to our customers.We have furthe

249、r strengthened our position in the market through the acquisition of intellectual property rights and the websites of affordablemobiles.co.uk and (from A1 Comms Limited in administration),which give us two further sales channels,as well as increasing our share of the market.In line with our plan for

250、 growth,the acquisition of the brands and platforms will provide AO with expertise and synergies that will accelerate the ambition to continue to expand our mobile proposition.LogisticsOur market-leading in-house logistics infrastructure enables the nationwide delivery of millions of products annual

251、ly,seven days a week,serving both AOs retail business and numerous third-party clients.Our delivery network operates from our central hub in Crewe,and encompasses warehouses and distribution centres with a total of over 1.4 million sq ft of space,supplemented by a network of 16 delivery depots acros

252、s the UK.As part of our strategic pivot to profit and cash generation,our logistics division has made significant strides in reducing costs and enhancing efficiencies within our delivery and warehousing operations throughout the year.Our operations AO World PLC Annual Report and Accounts 202433Overv

253、iewStrategic ReportOur GovernanceOur FinancialsShareholder InformationChief Financial Officers Reviewcontinuedare adaptable to the retail businesss demands for driver resources,and can leverage our operational gearing through third-party logistics.Our expertise in complex two-person delivery,which i

254、s highly valued in our industry,allows us to achieve incremental profitability without detracting from our core business.It is critically important that our people and our delivery partners are happy and feel valued in the work they do,given how central they are to the AO way.In the second half of t

255、he year we increased driver rates and performance payments.This initiative has reduced driver turnover and has no doubt played a part in increasing customer satisfaction.We continue to invest in our operation.Along with our fleet partners where we have invested to drive quality,we developed and laun

256、ched our new long semi trailers,which give a 10%increase in capacity per vehicle and will enable us to use compressed natural gas,as a transition fuel,across the entire trunking fleet by 2030.We also outsourced the delivery of smaller products(specifically SDA)to a third-party carrier early in FY25.

257、This change will see improved unit economics and enable us to expand the range of products available to customers.RecyclingOur recycling plant in Telford is amongst the largest fridge recycling facilities in Europe,adhering to the highest UK and European standards.This ensures the safe and efficient

258、 capture of environmentally harmful gases and oils.We specialise in recycling refrigeration products,including large American style fridges,but also process all old fridges and other white goods(“WEEE”).Our highly skilled repairs team refurbishes appliances that still have a useful life,which are th

259、en sold with a warranty through our established base of trade customers.This year we purchased our Recycling site in Halesfield,future proofing our ability to recycle and reaffirming our commitment to the environment and recycling.We reached a significant milestone by recycling or reusing our seven

260、millionth appliance.We continue to promote recycling by making it easy and accessible to all our customers.Despite a YoY decline in MDA volumes in our retail business,our recycling plant processed c.5%more volume highlighting our commitment to processing and recycling MDA at scale and in a responsib

261、le way.Over recent years,our recycling operations have been working to perfect the recycling of plastics into new electrical components to complete true circularity of recycling.In FY24,the throughput of plastic to our recycling plant grew by 10%,with continuous improvement in material quality.Our c

262、ommitment to plastic recycling has been further strengthened in the year with the commitment to purchase an extruder,which will enhance our plastics refining capability.It will mean that we are able to turn the recycled plastic flakes into pellets,which are then ready for moulding into new component

263、s,potentially opening new markets for us and reducing costs by eliminating the need for third-party extrusion.Importantly,use of recycled pellets means virgin plastics do not have to be used.The new plant is expected to arrive later in 2024 and become operational by the end of FY25.We continue to wo

264、rk with several strategic partners to use AO plastic.During the year,our recycled plastic was used to mould 1.5 million new fans along with various accessories and fittings.A newly formed partnership in the year saw our lower grade plastic material moulded into benches,tables and planters,demonstrat

265、ing how we think strategically about matching our outputs to specific uses as well as maximise value recovery.To expand the reuse of our plastic across Europe we must demonstrate the quality of our processes.During the year,we achieved RecyClass accreditation,demonstrating the consistent quality and

266、 traceability of our plastics.Our medium-term strategic objective continues to be“Closing the Loop”partnerships with key manufacturers to supply recycled products to make electrical appliances.We continue to collect third-party volumes using our own logistics network,providing efficient service from

267、 council amenity sites,while reducing the number of miles driven.We have noted the potential for legislative changes,including extended producer responsibility and the possibility that retailers will have to take back old waste products for free when they deliver new ones.Although this will add comp

268、lexity to our operation and comes at a cost,with our vertically integrated logistics and recycling businesses we are well placed to deal with such a requirement should it arise-and indeed it could provide further downstream opportunities.Financial performanceWe started the 2024 financial year contin

269、uing our actions to generate profit and cash.The financial year was impacted by consumer confidence as a result of the ongoing cost-of-living crisis as well as geopolitical events giving rise to uncertainty and volatility,negatively affecting both customer behaviour and our cost base.We maintained o

270、ur strategy of delivering profitable growth,which was cash generative.We delivered this strategy through the following key steps:AO World PLC Annual Report and Accounts 2024341.Improving gross marginWe continued to focus on optimising our gross margin by removing unprofitable sales and the annualisa

271、tion of delivery charges,which were introduced in the prior year to offset the growing costs of delivering for our logistics business.Pleasingly,our customers accept that it is right to pay a fair price for fantastic service.2.Optimisation of processesA culture of continual improvement will deliver

272、efficiency wins across our key operations including Logistics and Recycling.The vertically integrated nature of our business enables us to benefit from small changes in business units,generating financial gains to the P&L quickly,as well as capability wins for the business as we look to deliver prof

273、itable revenue growth.3.Ongoing overhead controlThe previous financial year saw us identify and implement operational efficiencies for a simplified operation,which includes warehouse space,rationalising vehicles and reducing our office footprint as well as completing an organisational restructure.Th

274、is year has seen us continue to right size our overheads and we continue to manage them closely during this period of significant inflationary pressure.4.Conversion of profit to cashAs part of our pivot,converting profit to cash is a key component of our ability to deliver further growth.We have cho

275、sen to invest in assets that will drive the long-term profitability of the business,in the acquisition of the land and buildings at our recycling plant and the acquisition of intellectual property rights and to the websites of affordablemobiles.co.uk and ,to strengthen our position in the mobile mar

276、ket.We renewed our 80m Revolving Credit Facility in April 2023 and subsequently extended the term in March 2024,with the facility now due to expire in April 2027.Our priorities for the current financial year remain to leverage our cost base and strengthen our balance sheet for profitable growth.AO r

277、emains a market leader in MDA in the UK with a 15.1%share of the total market,which provides us with a strong and resilient base from which to grow.Our strategy is to invest prudently in the business,seize the significant market opportunities that we see in front of us,and leverage our growing and l

278、oyal customer base.The following commentary,unless otherwise stated,covers our UK business only.Revenue(see table 1)For the 12 months ended 31 March 2024,revenue decreased by 8.7%to 1,039.3m(2023:1,138.5m).Product revenueProduct revenue,comprising sales generated from ,mobilephonesdirect.co.uk,marke

279、tplaces and third-party websites,decreased by 8.7%.This performance was in line with our plans and was the result of the impact of our strategic actions to improve profitability,removal of non-core channels and unprofitable sales,combined with the impact of the cost-of-living crisis on consumer spen

280、ding on the overall electricals market,which was down 2.5%YoY1.Our MDA revenue decreased YoY by 5.5%,with the total UK MDA market value falling 1.0%1.Service revenueService revenue,which includes membership income,fees for delivery,recycling,installation and related services,was impacted by the redu

281、ction in product revenue.However,this was offset by the annualisation of delivery charges(introduced in August 2022)and growth in membership uptake.The net result saw service revenue increase by 12.2%.Commission revenueCommission revenue,which includes commissions generated by network connections in

282、 our Mobile business and from AO Care product protection plans decreased by 18.1%.Our mobile business saw a drop in mobile commission revenue YoY.This drop in revenue comes as a result of a fall in the number of connections and a significant reduction in commission per connection,which was heavily i

283、mpacted by a decline in the total new contract market,which was 14%down YoY.In AO Care,the number of plans sold in FY24 reduced from FY23 in line with the drop in product revenue and consequently commissions from the sale of product protection plans reduced against the prior year.This was partly off

284、set by an increase in certain plan prices in the period in order to counter the increased costs incurred by Domestic&General in running the scheme.We have also benefited from reduced cancellation rates as customers recognise the value of these plans and the protection that it affords them during unc

285、ertain economic times.Third-party logistics revenueThird-party logistics stayed flat YoY with revenue of 27.6m.Our expertise in complex two-person delivery is highly valued in our industry,and we undertake a number of deliveries and other services on behalf of third-party clients in the UK including

286、 Hisense and Simba.This revenue delivers incremental profitability.The business will continue to maximise this revenue opportunity to leverage our operational gearing,without it distracting from the core business.1 Analysis of GfK data for 2023 and 2024.AO World PLC Annual Report and Accounts 202435

287、OverviewStrategic ReportOur GovernanceOur FinancialsShareholder Information1.Revenue Year endedm31 March 202431 March 2023%ChangeProduct revenue798.3874.8(8.7%)Service revenue63.156.212.2%Commission revenue128.1156.4(18.1%)Third-party logistics revenue27.627.60.1%Recycling revenue22.323.6(5.6%)1,039

288、.31,138.5(8.7%)Recycling revenueRecycling revenues decreased 5.6%over the year,which again was a pleasing performance when taking into account the wider trading environment.Although MDA sales volumes were down,uptake of our recycling service by customers increased leading to increased processed volu

289、mes year on year.This increase in volumes was offset by a decrease in output prices for recycled materials due to market forces.2.Gross MarginYear endedm31 March 202431 March 2023%ChangeGross profit243.3238.22.2%Gross margin23.4%20.9%+2.5 pptsGross marginGross profit,including product margins,servic

290、es and delivery costs,increased by 2.2%to 243.3m(2023:238.2m),against a sales decrease of 8.7%.Gross margin increased by 2.5ppts to 23.4%.This increase reflects the significant steps taken by the business to offset inflationary increases in operational costs through operational efficiencies,pricing

291、actions and the focus on profitable sales.3.Selling,General&Administrative Expenses(“SG&A”)Year ended m31 March 202431 March 2023%ChangeAdvertising and marketing 40.538.06.6%of revenue3.9%3.3%Warehousing52.259.8(12.7%)%of revenue5.0%5.2%Other admin115.0124.1(7.4%)%of revenue11.1%10.9%Adjustments4.5(

292、100%)%of revenue0.4%Administrative expenses207.7226.4(8.3%)%of revenue20.0%19.9%Selling,General&Administrative Expenses(“SG&A”)SG&A costs decreased during the period to 207.7m(2023:226.4m)and as a percentage of revenue stayed relatively flat at 20.0%(2023:19.9%).Increased investment in advertising a

293、nd marketing were offset by decreases in warehousing and other admin costs.Advertising and marketing costs increased to 40.5m(2023:38.0m)and increased as a percentage of revenue from 3.3%to 3.9%.We continue to focus on the efficiency of acquisition spend,which resulted in a decrease in pound spend Y

294、oY.This decrease was offset by an investment in TV and brand spend as we look to continue to grow our spontaneous brand awareness and Trust scores,which will help to deliver our targeted revenue growth.Warehousing costs,which include the costs of running our central warehouses for both our customers

295、 and for our third-party customers as well as the outbase infrastructure and our recycling operation came under focus during the period.Savings were made through both third-party leasing and efficiency improvements at the sites themselves.This resulted in a reduction to warehousing costs in cash ter

296、ms to 52.2m(2023:59.8m)with warehousing as a percentage of sales decreasing year on year.Other admin costs decreased to 115.0m(2023:124.1m),with an increase from 10.9%to 11.1%as a percentage of revenues.This primarily reflects the continued actions that the business has taken as part of the pivot to

297、 profit to control overheads through detailed reviews of spend incurred and property rationalisation.Although inflationary pressures have impacted the business,mainly driven by wage inflation in people costs,the business has managed to control overhead even against the decline in revenue seen in the

298、 year.Chief Financial Officers ReviewcontinuedAO World PLC Annual Report and Accounts 2024364.Adjusted PBTYear endedm31 March 202431 March 2023%ChangeProfit before tax34.37.6355%Adjusting Items4.5(100%)Adjusted PBT34.312.0186%Adjusted PBT as%of Revenue3.3%1.1%Operating profit and Adjusted Profit Bef

299、ore TaxAs a result of the previously mentioned actions and dynamics,our operating profit for the period was 36.2m(2023:12.5m).Alternative performance measures The group tracks a number of alternative performance measures in managing its business.These are not defined or specified under the requireme

300、nts of IFRS because they exclude amounts that are included in,or include amounts that are excluded from,the most directly comparable measure calculated and presented in accordance with IFRS or are calculated using financial measures that are not calculated in accordance with IFRS.The Group believes

301、that these alternative performance measures,which are not considered to be a substitute for,or superior to,IFRS measures,provide stakeholders with additional helpful information on the performance of the business.These alternative performance measures are consistent with how the business performance

302、 is planned and reported within the internal management reporting to the Board.Some of these alternative performance measures are also used for the purpose of setting remuneration targets.These alternative performance measures should be viewed as supplemental to,but not as a substitute for,measures

303、presented in the consolidated financial statements relating to the Group,which are prepared in accordance with IFRS.The Group believes that these alternative performance measures are useful indicators of its performance.Adjusted profit before taxAdjusted profit before tax“PBT”is calculated by adding

304、 back or deducting Adjusting Items to Profit Before Tax.Adjusting Items are those items which the Group excludes in order to present a further measure of the Groups performance.Each of these items,costs or incomes,is considered to be significant in nature and/or quantum or are consistent with items

305、treated as adjusting in prior periods.Excluding these items from profit metrics provides readers with helpful additional information on the performance of the business across periods because it is consistent with how the business performance is planned by,and reported to,the Board and the Chief Oper

306、ating Decision Maker.There were no adjusting items in the current year.The Adjusting Item for the prior year arose following the Groups change of strategy to focus on the UK business,in which it started a simplification of its operations which included removing areas of the business that didnt fit t

307、he current priorities,including the trial with Tesco and housebuilder contracts;simplifying the organisational structure and associated contracts and exiting surplus properties.As a consequence,the Group recognised an expense of 4.5m relating to the restructuring which,due to its size and nature,was

308、 added back in arriving at Adjusted PBT.The reconciliation of statutory Profit Before Tax to Adjusted PBT is set out in table 4.TaxationThe tax charge for the year was 9.6m(2023:tax charge of 1.2m)resulting in an effective rate of tax for the year of 27.8%.The effective rate of tax is higher than th

309、e UK corporation tax rate for the period of 25%predominantly due to the Groups share-based payment charge for the year.The Group continue to offset UK tax losses brought forward against its taxable profits,which is reflected in the tax payments made in the UK.Pillar Two legislation has been enacted

310、in the UK to introduce the multinational top-up tax and domestic top-up tax to accounting periods beginning on or after 31 December 2023.The Group have performed an assessment of this legislation and do not expect a potential exposure to Pillar Two income taxes.Our tax strategy can be found at ao- W

311、orld PLC Annual Report and Accounts 202437OverviewStrategic ReportOur GovernanceOur FinancialsShareholder InformationRetained profit for the year and earnings per shareThe Groups retained profit for the year was 24.7m(FY23:loss of 2.6m).Earnings per share were as follows:12 months endedm31 March 202

312、431 March 2023Profit/(Loss)Profit attributable to Owners of the Parent Company from Continuing operations24.76.2Loss attributable to Owners of the Parent Company from Discontinued operations(8.8)24.7(2.6)Number of sharesWeighted average shares in issue for the purposes of basic earnings/(loss)per sh

313、are577,184,050548,947,969Potentially dilutive shares 21,058,82515,509,762Diluted weighted average number of shares598,242,875564,457,731Earnings per share from continuing operations(pence per share)Basic earnings per share4.291.13Diluted earnings per share4.141.10Earnings/(loss)per share from contin

314、uing and discontinued operations(pence per share)Basic earnings/(loss)per share4.29(0.48)Diluted earnings/(loss)per share4.14(0.47)Cash resources and cashflowAt 31 March 2024,the Groups available liquidity,being Cash and cash equivalents plus amounts undrawn on its revolving credit facility,was 116.

315、4m(FY23:88.9m).On 5 April 2023,the Group renewed its 80m revolving credit facility and,following agreement with the lenders in March 2024,the maturity has now been extended by one year to April 2027.At 31 March 2024,the Group had 76.3m available on its facility.The amount utilised represents 3.7m of

316、 guarantees and letters of credit.During the year,the Group generated a cash inflow of 21.0m(FY23:0.3m outflow)as set out in the table below:As atm 31 March 202431 March 2023UKGermanyTotalUKGermanyTotalCashflow from operating activities62.1(0.5)61.633.2(8.8)24.4Cashflow from investing activities(7.6

317、)(7.6)(2.1)9.87.7Cashflow from financing activities(32.9)(0.1)(33.0)(23.7)(8.6)(32.3)Cash movement in the year21.6(0.6)21.07.4(7.7)(0.3)Cashflow from UK operating activities 62.1m(FY23:33.2m)principally as a result of the improved operating performance in the period and an improvement in working cap

318、ital(cash outflow of 3.2m in FY24 versus outflow of 19.4m in FY23).The Groups movement in working capital outflow is set out in the table below:As atm 31 March 202431 March 2023UKGermanyTotalUKGermanyTotalInventories79.579.573.173.1Trade and other receivables 205.1205.1230.90.2231.1Trade and other p

319、ayables(228.0)(0.1)(228.1)(253.5)(0.8)(254.3)Net working capital56.6(0.1)56.550.5(0.6)49.9Inventories increased slightly in the year principally within our Retail business as we improved availability of the extended range of customers.Inventory days were 43 days at 31 March 2024(31 March 2023:40 day

320、s).Trade and other receivables reduced by 26m to 205m.This was driven in the main by the impact of lower connection volumes in our Mobile business with cash received from past connections outweighing new income recognised.In addition,the exit from loss making B2B trade business was finalised in the

321、year and the Group improved its collection of supplier marketing income.Chief Financial Officers ReviewcontinuedAO World PLC Annual Report and Accounts 202438Trade and other payables reduced by 26m to 228m.This again was largely impacted by Mobile with reduced connections impacting the purchases in

322、the last quarter in addition to a reduction in upfront payments received from the networks.In the rest of the Group,VAT liabilities reduced based on the different phasing of purchases in Q4 of each year partly offset by the increase in deferred income in March 2024 as a result of Easter.Creditor day

323、s at 31 March 2024 were 55(31 March 2023:51)reflecting continued support from our supplier base.Cashflow from UK investing activities 7.6m outflow(2023:2.1m outflow)Cash capital expenditure in the year of 5.9m principally related to the acquisition of the land and buildings at the Groups main recycl

324、ing site and further investment in plant across both sites.Expenditure in FY25 is anticipated to be higher as the Group starts a refresh of its logistics fleet.In February 2024,the Group acquired certain assets of A1 Comms Limited(in administration),which primarily related to intellectual property a

325、nd two websites.Cash consideration for the acquisition was 2.3m including fees.Cashflow from UK financing activities 33.0m outflow(2023:23.7m outflow)principally related to lease repayments of 18.5m(FY23:17.6m),net cash outflow in borrowings of 7.9m(FY23:35m)and net interest paid of 6.9m(FY23:8.0m).

326、The prior year movements were partly offset by proceeds from a share issue of 39m.Cashflows in relation to the discontinued German operation were,as expected,immaterial and mainly related to the unwind of outstanding creditors from 31 March 2023.As a result of the above movements,Net funds and Total

327、 net debt were as follows:As atm31 March2024m31 March2023mCash and cash equivalents at year-end40.119.1Borrowings-Repayable within one year(0.2)(10.0)Borrowings-Repayable after one year(1.9)Owned asset lease liabilities -Repayable within one year(1.6)(1.9)Owned asset lease liabilities-Repayable afte

328、r one year(2.0)(3.6)Net funds excluding leases relating to right-of-use assets34.43.6Right of use asset lease liabilities-Repayable within one year(15.4)(15.8)Right of use asset lease liabilities-Repayable after one year(49.8)(63.9)Net debt(30.8)(76.1)Borrowings of 2.1m(2023:10.0m)relate in the curr

329、ent year to a mortgage used to partly fund the acquisition of one of the Groups recycling sites.In the prior year,the 10m of borrowings related to short-term funding drawn from the Groups revolving credit facility,which was repaid during FY24.Lease liabilities decreased by 16.6m to 68.7m(2023:85.3m)

330、principally reflecting capital repayments of 18.5m offset partly by 4m of new leases mainly relating to vehicles.On 5 April 2023,the Group renewed its 80m Revolving Credit Facility and,following agreement with the lenders in March 2024,the maturity has now been extended by one year to April 2027.At

331、31 March 2024,the Group had 76.3m available on its facility.The amount utilised represents 3.7m of guarantees and letters of credit.Mark HigginsChief Financial OfficerAO World PLC Annual Report and Accounts 202439OverviewStrategic ReportOur GovernanceOur FinancialsShareholder InformationOur risksHow

332、 do we manage risk?In common with many businesses,AO faces a broad range of risks due to the scale and nature of operations.In order to manage our risks,we have a well-established risk management framework with policies and methodologies in place for identifying and addressing risks and with clearly

333、 defined lines of responsibility,accountability and delegation of authority.Effective risk management allows us to identify,appropriately monitor and,to the extent possible,mitigate these risks in line with our risk appetite,so that we can deliver our strategic objectives and protect value for our key stakeholders.Internal auditInternal Audit and Business Unit Risk Management CommitteesRetail Mob