TIDMAO.
RNS Number : 0582U
AO World plc
21 November 2023
21 November 2023
AO WORLD PLC
INTERIM RESULTS FOR THE 6 MONTHSED 30 SEPTEMBER 2023
STRATEGIC PIVOT PROGRESS CONTINUES AND PROFIT GUIDANCE
UPGRADED
AO World PLC ("the Group" or "AO"), the UK's most trusted
electrical retailer, today announces its unaudited financial
results(1) for the six months ended 30 September 2023 ("HY24").
The first six months to September 2023 saw the continued
delivery of profit and cash generation. As a result, we are
upgrading our profit before tax guidance for FY24 to between
GBP28-33m.
GBPm (1) HY24 HY23 Mvmt
===== =======
Revenue 482 546 (12%)
===== ======= ========
Adjusted EBITDA (2) 27 9 205%
===== ======= ========
Operating profit/ (loss) 15 (9) NM% (8)
===== ======= ========
Profit / (loss) before tax 13 (12) NM%
===== ======= ========
Basic earnings/ (loss) per share 1.64 (2.14) NM%
===== ======= ========
Net funds/ (debt) 16 (19) NM%
===== ======= ========
Highlights
-- Step change in profitability year-on-year as we continue to
deliver on our strategic pivot to profit and cash
-- Statutory profit before tax of GBP13m (HY23: GBP(12)m). Gross
margin has improved to 23.5% (HY23: 19.5%) as a result of decisive
action:
o Removing unprofitable sales as well as the introduction of
delivery charges on all deliveries.
o Advertising and Marketing costs have been tightly controlled
with a change in focus of spending from acquisition to brand
investment.
o Warehousing costs have fallen to GBP25.5m (HY23: GBP31.3m) or
to 5.3% of sales (HY23: 5.7%). Operational efficiencies and
annualisation of property rationalisation, offset by inflationary
increases in wages.
o Other admin costs have decreased by GBP9.4m to GBP56m. Tight
control over ongoing spend has helped offset inflationary
pressures.
o The overall mobile market has declined in the year, which has
negatively impacted the Group's ability to hit network volume
targets set for the calendar year 2023. This will have an overall
single digit millions profit drag in FY24 and this is absorbed
within the upgrade today.
-- Adjusted EBITDA of GBP27m (HY23: GBP9m), achieving an
adjusted EBITDA margin of 5.6% (HY23: 1.6%)
-- Improved cash generation in the period leading to overall
liquidity(3) of GBP99m (31 March 2023: GBP89m: 30 September 2022):
GBP68m and net funds(4) of GBP16m (31 March 2023: GBP4m: 30
September 2022: net debt GBP19m)
-- Revenue decreased by 12% as expected as we continue to
annualise the actions taken to remove non-core channels and
unprofitable sales, and increase gross margins.
-- Over 290,000 new customers (5) experienced the AO Way during
the period with an increase in the repeat customer purchase
percentage rate.
-- Customer satisfaction scores remain outstanding: Trustpilot
reviews have grown to over 440,000 averaging 4.7 out of 5 stars -
continuing to position AO as the UK's most trusted electrical
retailer.
-- Focus on branded advertising has increased spontaneous brand awareness by about 10% YoY.
Outlook
Our previous FY24 guidance in July was for PBT around GBP28m
(9.) Whilst mindful of the ongoing cost of living crisis and
geopolitical events that give rise to uncertainty and volatility,
we continue to optimise for profit outturn and are increasing our
profit before tax expectations to between GBP28m and GBP33m for the
full year. We now expect FY24 revenue to be around -10% YOY.
We will continue to invest prudently in the business and seize
the significant market opportunities that we see in front of us,
with our growing and loyal customer base.
Our medium-term ambitions remain unchanged:
-- Annual revenue growth in a corridor of 10 -20%
-- PBT margin 3 - 5%
-- Profit converting to cash
Longer-term, our addressable market in the UK is significant as
it currently stands at cGBP27.6bn (6) , and in order to take
advantage of this we will look to deepen our presence in categories
such as televisions, laptops, audio visual and small domestic
appliances ("SDA"). The online segment of the market in those
categories remains a key opportunity for us as the long-term
structural migration to online retailing continues.
AO's Founder and Chief Executive, John Roberts, said : "I am
very pleased with the clear progress that we are making as a result
of our strategic pivot to focusing on profit and cash. We have
generated more profit in the first half of this year than we did in
the whole of last year, and are also upgrading our profit
expectations for the remainder of FY24.
"As we anticipated, sales have reduced year on year as we
continue to annualise the actions that we've taken to remove
non-core channels and unprofitable sales from the business.
However, we expect to end the year having returned to run rate
revenue growth.
"Our core fundamentals are in great shape and our service to
customers has never been better. Our Trustpilot scores continue to
be the best in the market, our spontaneous brand awareness is at
record levels, and our transacted customer base now stands at 11.6m
people.
"As ever, I'm grateful to our manufacturer partners for their
continued support and of course to the fantastic AO team who
continue to be magical in the moments that matter for customers
while maintaining the discipline and focus needed to deliver our
plan.
"We look forward with cautious optimism, given the macro
challenges, as we turn our attention back to delivering profitable
revenue growth to drive our operational gearing."
Enquiries
AO World PLC Tel: +44(0)1204 672 400
John Roberts, Founder & CEO ir@ao.com
Mark Higgins, CFO
Powerscourt Tel: +44(0) 20 7250 1446
Rob Greening ao@powerscourt-group.com
Nick Hayns
Elizabeth Kittle
Webcast details
An in-person results presentation and Q&A will be held for
analysts and investors at 09:00 GMT with registration opening at
08:30 GMT today, 21 November 2023 at our London Creative Hub.
Advance registration, prior to arrival, is required by emailing
ao@powerscourt-group.com. A playback of the presentation will be
available on AO World's corporate website at www.ao-world.com in
the afternoon.
About AO
AO World PLC, headquartered in Bolton and listed on the London
Stock Exchange, is the UK's most trusted major electricals retailer
, with a mission to be the destination for electricals. Our
strategy is to create value by offering our customers brilliant
customer service and making AO the destination for everything they
need, in the simplest and easiest way, when buying electricals. We
offer major and small domestic appliances and a growing range of
mobile phones, AV, consumer electricals and laptops. We also
provide ancillary services such as the installation of new and
collection of old products and offer product protection plans and
customer finance. AO Business serves the B2B market in the UK,
providing electricals and installation services at scale. AO also
has a WEEE processing facility, ensuring customers' electronic
waste is dealt with responsibly .
______________________________
(1) Unless otherwise stated all numbers relate to the continuing
operations of the Group and therefore exclude the impact of
Germany. Refer to note 11 for further details.
(2) Adjusted EBITDA is defined as Profit/ (Loss) before
interest, tax, depreciation, amortisation, profit/ (loss) on
disposal of fixed assets, impairment of assets and Adjusting items
(see page 8).
(3) Liquidity is the total of cash and cash equivalents and the
remaining availability on the revolving credit facility.
(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.
(5) A customer is defined as an individual customer who has
purchased via ao.com.
(6) Total electricals market data from GfK, for the 12 months to
2 April 2023. AO's value is from company data, net value.
(7) GfK data for FY24. AO's value is from company data.
(8) Where comparison change is a swing from negative to
positive, this is judged to be a non-meaningful ("NM")
comparison.
(9) Guidance was for 2.5% PBT on sales of cGBP1.1bn
Cautionary statement
This announcement may contain certain forward-looking statements
(including beliefs or opinions) with respect to the operations,
performance and financial condition of the Group. These statements
are made in good faith and are based on current expectations or
beliefs, as well as assumptions about future events. By their
nature, future events and circumstances can cause results and
developments to differ materially from those anticipated. Except as
is required by the Listing Rules, Disclosure Guidance and
Transparency Rules and applicable laws, no undertaking is given to
update the forward-looking statements contained in this document,
whether as a result of new information, future events or otherwise.
Nothing in this document should be construed as a profit forecast
or an invitation to deal in the securities of the Company. This
announcement has been prepared for the Group as a whole and
therefore gives greater emphasis to those matters which are
significant to AO World PLC and its subsidiary undertakings when
viewed as a whole .
CHIEF EXECUTIVE'S REVIEW
The first half of the year has seen the business continue to
deliver on the changes from our pivot to profit, and we have
continued to join the business up in order to drive further
efficiencies.
UK inflation has remained high relative to the last 40 years
and, combined with continuing global economic uncertainty, this has
served to create a challenging environment in the UK and for retail
consumers, specifically.
However, we have an in-built resilience because of our more
affluent customers base and the fact that 81% of our sales are MDA
with the majority coming from distress purchases; consequently, we
remain cautiously positive. We are focused on driving our model
through a lens of profitability and cash generation whilst
maintaining our world-class service and being magical in the
moments that really matter for our customers.
AO has 16.4% (7) of the total major domestic appliance ("MDA")
market and 29.6% (7) of the online MDA market, with the reductions
noted in the period resulting from proactive decisions that we have
made to deliver profit and cash generative sales. Against that
backdrop, it is also worth noting that in the last year the total
MDA market has declined by 2% (7) .
As we annualise our pivot to profit and cash, it is clear that
the strategy is delivering. We generated more profit in the first
six months of this financial year than we did in the whole of FY23.
As we head into H2, we will continue to focus on actions that
continue to generate profit whilst also exploring avenues for
revenue growth.
FINANCIAL REVIEW
Unless otherwise stated, the below relates to continuing
operations in the UK only.
Revenue
6 months ended 6 months ended
GBPm 30 September 2023 30 September 2022 % change
------------------------------ ------------------ ------------------ --------
Product revenue 370.3 432.5 (14.4%)
Service revenue 30.4 23.3 30.5%
Commission revenue 56.7 65.9 (14.1%)
Third-party logistics revenue 13.2 12.9 2.8%
Recycling revenue 11.1 11.7 (5.4%)
------------------------------ ------------------ ------------------ --------
481.7 546.3 (11.8%)
------------------------------ ------------------ ------------------ --------
For the six months ended 30 September 2023, UK revenue decreased
11.8% to GBP481.7m (HY23: GBP546.3m).
Product revenue
Product revenue, comprising sales generated from ao.com,
marketplaces and third-party websites, decreased 14.4%. In the
short term the business continues to annualise actions taken to
improve margin and profitability as part of the strategic pivot.
The total MDA market value has seen a decline of 2%, which has
further contributed to the decline in revenue. We continue to
review our product range and look for category expansion
opportunities that contribute further to our profitability.
Service revenue
Service revenue, which includes delivery and customer
installation services, increased by 30.5% reflecting the
annualisation of the introduction of delivery charges for all
deliveries.
Commission revenue
Commission revenue includes commissions generated by network
connections in our Mobile business and from the promotion of AO
Care warranties for Domestic and General. Commissions from the sale
of warranties decreased in line with product sales. The Mobile
industry has seen a significant decline, with the Contract Handset
Acquisition Market declining by c13% on a LFL basis for the past
six months of trading. Connections have fallen as a result of
market conditions; this has been partly offset with improvements in
the average life of new contracts and the impact of some RPI
increases but has resulted in losses in our Mobile business.
Third-Party Logistics revenue
Our expertise in complex two-person delivery is highly valued in
our industry, and we undertake a number of deliveries on behalf of
Third Party clients i n the UK. Revenue in this area grew by 2.8%
and delivers incremental profitability. We will continue to
maximise this revenue opportunity to leverage our operational
gearing, without it distracting from our core business.
Recycling revenue
Recycling revenue has decreased by GBP0.6m as a result of a
reduction in processed volumes and a reduction in output material
prices due to market forces.
Gross margin
6 months ended 6 months ended
30 September 30 September
GBPm 2023 2022 % change
Gross profit 113.0 106.5 6.2%
------------- -------------- -------------- --------
Gross margin 23.5% 19.5% 20.4%
------------- -------------- -------------- --------
Gross profit, including product margins, services and delivery
costs, increased by 6.2% to GBP113.0m (HY23: GBP106.5m). The
actions that the business has taken in the last 12-18 months to
pivot to profit is contributing to this large increase in gross
margin. The actions taken in product pricing supported by strong
relationships with suppliers, the introduction of delivery charges
on all deliveries and our focus on profitable sales which fit our
model have contributed to this shift in gross margin. The mobile
business, as noted above, has had a negative impact on gross margin
and is an area of focus for the business in the second half of the
financial year.
Selling, General & Administrative Expenses ("SG&A")
6 months ended 6 months ended
30 September 30 September
GBPm 2023 2022 % change
-------------------------- -------------- -------------- --------
Advertising and marketing 17.4 17.7 (1.9%)
-------------------------- -------------- -------------- --------
% of revenue 3.6% 3.2%
-------------------------- -------------- -------------- --------
Warehousing 25.5 31.3 (18.6%)
-------------------------- -------------- -------------- --------
% of revenue 5.3% 5.7%
-------------------------- -------------- -------------- --------
Other admin 56.0 65.4 (14.3%)
-------------------------- -------------- -------------- --------
% of revenue 11.6% 12.0%
-------------------------- -------------- -------------- --------
Adjusting items - 3.6 100.0 %
-------------------------- -------------- -------------- --------
% of revenue - 0.7%
-------------------------- -------------- -------------- --------
Administrative expenses 98.9 118.0 (16.2%)
-------------------------- -------------- -------------- --------
% of revenue 20.5% 21.6%
-------------------------- -------------- -------------- --------
SG&A costs have decreased YOY by 16.2%. As a percentage of
revenue there has been a decrease during the period from 21.6% to
20.5% as we continue to look to maximise efficiencies and reduce
our cost base in line with our strategy of pivoting to profit and
cash.
The majority of our advertising and marketing costs occur within
our Retail and Mobile businesses. As noted the Mobile industry has
been highly competitive in the year which has led to an increase in
acquisition spend year on year as attracting customers in a
declining market has become less efficient. In our Retail business
we have continued to look to improve the efficiency of acquisition
spend such as Pay Per Click (PPC) and affiliate spend, both of
which have fallen as a percentage of sales. We have increased our
brand investment significantly which has contributed to our
spontaneous brand awareness increasing YOY by about 10%.
Warehousing costs have materially fallen in cash terms and as a
percentage of sales. This is the result of several efficiency
savings across our warehousing operations, as well as the
annualisation of property rationalisation, offset by inflationary
increases in wages. Warehousing costs are geared ready for growth
and continue to present an opportunity for further cost savings in
process efficiencies.
Other admin costs, which includes staff and office costs,
decreased by GBP9.4m to GBP56.0m (HY23: GBP65.4m). Savings are a
result of the annualisation of actions taken regarding property
rationalisation and rightsizing the headcount for being a UK
business after the closure of Germany, offset by inflation
pressures in the last 12 months. The business continues to focus on
controlling overhead costs.
Operating Profit
Operating profit for the period was GBP14.7m (HY23: GBP9.3m
loss), for the reasons explained above.
Alternative Performance Measures
The Group tracks a number of alternative performance measures in
managing its business. These are not defined or specified under the
requirements 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 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 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
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.
EBITDA
EBITDA is defined by the Group as Profit/(Loss) from continuing
activities before interest, tax, depreciation, amortisation,
profit/ (loss) on the disposal of fixed assets and impairment of
assets.
Adjusted EBITDA
Adjusted EBITDA is calculated by adding back or deducting
Adjusting items to EBITDA. Adjusting items are those items that the
Group excludes in order to present a further measure of the Group's
performance. Each of these items, costs or incomes is considered to
be significant in nature and/or quantum or are consistent with
items 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
Operating Decision Maker.
The reconciliation of statutory operating profit/ (loss) to
Adjusted EBITDA is as follows:
6 months 6 months
ended ended
GBPm 30 September 2023 30 September 2022 % change
Operating profit/ (loss) 14.7 (9.3) 158.4%
Depreciation 11.1 12.5 11.4%
Amortisation 1.2 1.3 9.1%
(Profit)/ Loss on disposal of assets (0.1) 0.7 19.7 %
EBITDA 26.9 5.2 418.2%
------------------------------------- ------------------ ------------------ --------
Adjusting items - 3.6 (100.0%)
Adjusted EBITDA 26.9 8.8 204.9%
------------------------------------- ------------------ ------------------ --------
Adjusted EBITDA as % of Revenue 5.6% 1.6%
------------------------------------- ------------------ ------------------ --------
Adjusting items
There were no adjusting items in the six months ended 30
September 2023.
In the six months ended 30 September 2022, following the Group's
change of strategy to focus on the UK business, the Group started a
simplification of its operations which included exiting various
loss-making parts of the business including the trial with Tesco,
simplifying the organisational structure and associated contracts.
As a consequence, the Group recognised an expense of GBP3.6m
relating to the restructuring which, due to its size and nature,
was added back in arriving at Adjusted EBITDA.
Taxation
The tax charge is recognised based on management's best estimate
of the weighted-average annual corporation tax rate expected for
the full financial year multiplied by the pre-tax results of the
interim reporting period. The Group's tax charge for the period is
GBP3.8m (2022: GBP1.1m credit) as a result of the expected
effective tax rate for the year of 31.1% in entities taxable in the
UK, before prior period adjustments and discrete tax adjustments
relating to the period ended 30 September 2023 only. This results
in a combined effective tax rate for the period ended 30 September
2023 of 28.14%.
Discontinued Operations
Following the closure of the Groups German business in June
2022, the German operations are now treated as a discontinued
activity under IFRS5. The results and cashflows are therefore shown
separately on the face of each of these condensed primary
statements. Further details are included in note 11.
Retained profit and earnings per share
Retained profit for the period, including discontinued
operations, was GBP9.4m (2022: GBP18.9m loss).
Basic earnings per share from continuing operations was 1.64p
(2022: 2.14p loss) and diluted earnings per share from continuing
operations was 1.59p (2022: restricted to 2.14p loss).
Basic earnings per share from continuing and discontinued
operations was 1.64p (2022: 3.65p loss) and diluted earnings per
share from continuing and discontinued operations was 1.59p (2022:
restricted to 3.65p loss).
The calculations for earnings/ (loss) per share are shown in the
table below:
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
GBPm 2023 2022 2023
---------------------------------------------------- --------------- ----------------- --------------
Earnings/ (Loss) attributable to owners
of the parent company from continuing
operations 9.4 (11.1) 6.2
Earnings/ (Loss) attributable to owners
of the parent company from discontinued
operations - (7.9) (8.8)
---------------------------------------------------- --------------- ----------------- --------------
Earnings/ (Loss) attributable to owners
of the parent company 9.4 (19.0) (2.6)
---------------------------------------------------- --------------- ----------------- --------------
Number of shares
Basic weighted average number of ordinary
shares 576,827,866 521,677,418 548,947,969
Potentially dilutive shares options 16,924,982 12,865,785 15,509,762
---------------------------------------------------- --------------- ----------------- --------------
Diluted weighted average number of
ordinary shares 593,752,848 534,543,203 564,457,731
---------------------------------------------------- --------------- ----------------- --------------
Earnings/ (loss) per share (in pence) from
continuing operations
--------------------------------------------------------------------- ----------------- --------------
Basic earnings/ (loss) per share 1.64 (2.14) 1.13
Diluted earnings/ (loss) per share 1.59 (2.14) 1.10
Earnings/ (loss) per share (in pence) from continuing and discontinued
operations
--------------------------------------------------------------------------------------------------------
Basic earnings/ (loss) per share 1.64 (3.65) (0.48)
Diluted earnings/ (loss) per share 1.59 (3.65) (0.47)
In the period to 30 September 2022, the diluted loss per share
had been restricted to the basic loss per share to prevent having
an anti-dilutive effect.
Cash resources and cash flow
Net funds, which comprise Cash and cash equivalents less
borrowings and owned asset lease liabilities, were GBP15.6m (31
March 2023: GBP3.6m; 30 September 2022: net debt GBP18.6m).
At 30 September 2023, the Group's total net debt, being net
funds less right of use lease liabilities, was GBP54.8m (31 March
2023: GBP76.1m; 30 September 2022: GBP102.3m).
Cash balances at 30 September 2023 were GBP22.4m (31 March 2023:
GBP19.1m; 30 September 2022: GBP42.9m). The cash generation in the
period was largely driven by the improved operating performance
which has also enabled the Group to fully repay its revolving
credit facility.
Cash drawdowns on the Group's revolving credit facility, which
are classed as borrowings, were GBPnil at 30 September 2023 (31
March 2023: GBP10.0m; 30 September 2022: GBP55.0m). In the current
period, the Group entered into a mortgage to part fund the
acquisition of the site from which its main Recycling business
operates and at 30 September 2023 an amount of GBP2.2m was
outstanding being the only external borrowing at that date.
Lease liabilities of GBP75.0m (31 March 2023: GBP85.3m, 30
September 2022: GBP90.2m) relate primarily to right of use assets
with the reduction in the period due to cash repayments.
On 6 April 2023, the Group entered into a new GBP80m Revolving
Credit Facility which replaced its existing facility. The new
facility runs to April 2026. The total amount utilised against this
facility at 30 September 2023 was GBP3.7m relating to letters of
credit/guarantees.
Working Capital
30 September 2023 31 March 2023 30 September 2022
GBPm UK Germany Total UK Germany Total UK Germany Total
----------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Inventories 68.4 - 68.4 73.1 - 73.1 69.9 - 69.9
----------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Trade and other
receivables 222.5 - 222.5 230.9 0.2 231.1 236.2 2.3 238.5
----------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Trade and other
payables (239.6) (0.1) (239.7) (253.5) (0.8) (254.3) (261.7) (4.5) (266.2)
----------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net working 51
capital .3 (0.1) 51.2 50.5 (0.6) 49.9 44.4 (2.2) 42.2
----------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Change in net
working capital 0.8 0.5 1.3 6.1 1.6 7.7 15.4 (12.0) 3.4
----------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
At 30 September 2023, UK inventories were GBP68.4m (31 March
2023: GBP73.1m) and UK stock days were 35 days (31 March 2023: 40
days). The reduction is partly driven by the lower sales volumes in
the period albeit this has been balanced against ensuring we
maintain appropriate levels to maintain customer availability.
UK trade and other receivables (both non-current and current)
were GBP222.5m as at 30 September 2023 (31 March 2023: GBP230.9m).
The decrease is largely driven by the slowdown in volumes and hence
revenue in our Mobile business and the subsequent reduction in the
related contract asset.
UK trade and other payables were GBP239.6m at 30 September 2023
(31 March 2023: GBP253.5m). UK trade payables days at 30 September
2023 were 59 days (31 March 2023: 58 days). The reduction in retail
volumes in the period has resulted in lower payables. In addition,
the year on year decline in new contract connections in our Mobile
business has resulted in a reduction in the amount of advanced
payments from network
Capital expenditure
Cash capex of GBP4.1m in the first half (30 September 2022:
GBP1.0m) was mainly related to the acquisition of the previously
leased land and buildings at our Recycling site. This was part
funded by a GBP2.2m commercial mortgage.
John Roberts Mark Higgins
Founder and Chief Executive Officer Chief Financial Officer
CONDENSED CONSOLIDATED INCOME STATEMENT
For the 6 months ended 30 September 2023
6 months Year
ended 6 months ended ended
30 September 30 September 31 March
GBPm Note 2023 2022 2023
-------------------------------------- ---- -------------- -------------- ---------
Revenue 2 481.7 546.3 1,138.5
Cost of sales 3 (368.7) (439.8) (900.3)
-------------------------------------- ---- -------------- -------------- ---------
Gross profit 113.0 106.5 238.2
Administrative expenses 3 (98.9) (118.0) (226.4)
Other operating income 3 0.6 2.2 0.7
-------------------------------------- ---- -------------- -------------- ---------
Operating profit/ (loss) 14.7 (9.3) 12.5
Finance income 4 2.0 1.5 2.9
Finance costs 5 (3.5) (3.8) (7.8)
-------------------------------------- ---- -------------- -------------- ---------
Profit/ (Loss) before tax 13.2 (11.6) 7.6
Taxation (3.8) 0.6 (1.2)
-------------------------------------- ---- -------------- -------------- ---------
Profit/ (Loss) after tax for the
period from continuing operations 9.4 (11.0) 6.4
Loss for the period from discontinued
operations 11 - (7.9) (8.8)
-------------------------------------- ---- -------------- -------------- ---------
Profit/ (Loss) for the period 9.4 (18.9) (2.4)
-------------------------------------- ---- -------------- -------------- ---------
Profit/ (Loss) for the period attributable
to:
Owners of the parent company 9.4 (19.0) (2.6)
Non-controlling interest - 0.1 0.2
-------------------------------------- ---- -------------- -------------- ---------
9.4 (18.9) (2.4)
-------------------------------------- ---- -------------- -------------- ---------
Earnings/ (Loss) per share (pence) from continuing
operations
Basic earnings/ (loss) per share 1.64 (2.14) 1.13
Diluted earnings/ (loss) per
share 1.59 (2.14) 1.10
Earnings/ (Loss) per share (pence) from continuing and
discontinued operations
Basic earnings/ (loss) per share 1.64 (3.65) (0.48)
Diluted earnings/ (loss) per
share 1.59 (3.65) (0.47)
-------------------------------------- ---- -------------- -------------- ---------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 6 months ended 30 September 2023
6 months 6 months
ended 30 ended 30 Year ended
September September 31 March
GBPm 2023 2022 2023
------------------------------------- ------------ ------------ -----------
Profit/ (Loss) for the period 9.4 (18.9) (2.4)
Items that may be subsequently recycled to Income Statement
Exchange differences on translation
of foreign operations - (8.3) (6.4)
------------------------------------- ------------ ------------ -----------
Total comprehensive profit/ (loss)
for the period 9.4 (27.2) (8.8)
------------------------------------- ------------ ------------ -----------
Total comprehensive profit/ (loss) for the period attributable
to:
Owners of the Company 9.4 (27.3) (9.0)
Non-controlling interests - 0.1 0.2
------------------------------------- ------------ ------------ -----------
9.4 (27.2) (8.8)
------------------------------------- ------------ ------------ -----------
Total comprehensive profit/ (loss) attributable to owners of
the parent arising from:
Continuing operations 9.4 (11.1) 6.2
Discontinued operations - (16.2) (15.2)
------------------------------------- ------------ ------------ -----------
9.4 (27.3) (9.0)
------------------------------------- ------------ ------------ -----------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2023
30 September 30 September 31 March
GBPm Note 2023 2022 2023
------------------------------ ---- -------------- ------------ --------
Non-current assets
Goodwill 6 28.2 28.2 28.2
Other intangible assets 8.3 10.8 9.6
Property, plant and equipment 21.7 24.4 20.9
Right of use assets 61.1 73.1 69.4
Trade and other receivables 7 89.5 89.1 93.3
Deferred tax asset 5.9 10.1 8.3
------------------------------ ---- -------------- ------------ --------
214.7 235.7 229.7
------------------------------ ---- -------------- ------------ --------
Current assets
Inventories 68.4 69.9 73.1
Trade and other receivables 7 133.0 149.4 137.8
Corporation tax receivable 1.3 1.8 0.6
Cash and cash equivalents 22.4 42.9 19.1
225.1 264.0 230.6
------------------------------ ---- -------------- ------------ --------
Assets held for sale 11 - 3.9 -
------------------------------ ---- -------------- ------------ --------
225.1 267.9 230.6
------------------------------ ---- -------------- ------------ --------
Total assets 439.8 503.6 460.3
------------------------------ ---- -------------- ------------ --------
Current liabilities
Trade and other payables 8 (236.8) (262.6) (249.5)
Borrowings 9 (0.2) (55.0) (10.0)
Lease liabilities 9 (17.0) (18.8) (17.8)
Provisions (0.5) (2.7) (1.2)
(254.5) (339.1) (278.5)
------------------------------ ---- -------------- ------------ --------
Net current liabilities (29.4) (71.2) (47.9)
------------------------------ ---- -------------- ------------ --------
Non-current liabilities
Trade and other payables 8 (2.9) (3.6) (4.8)
Borrowings 9 (2.0) - -
Lease liabilities 9 (58.0) (71.4) (67.5)
Provisions (3.7) (3.1) (3.8)
------------------------------ ---- -------------- ------------ --------
(66.6) (78.1) (76.1)
------------------------------ ---- -------------- ------------ --------
Total liabilities (321.0) (417.2) (354.6)
------------------------------ ---- -------------- ------------ --------
Net assets 118.7 86.4 105.7
------------------------------ ---- -------------- ------------ --------
Equity attributable to owners
of the parent
Share capital 1.4 1.4 1.4
Investment in own shares - - -
Share premium account 108.5 108.2 108.2
Other reserves 70.4 57.5 59.4
Retained losses (61.6) (79.8) (63.3)
------------------------------ ---- -------------- ------------ --------
Total 118.7 87.3 105.7
------------------------------ ---- -------------- ------------ --------
Non-controlling interest - (0.9) -
------------------------------ ---- -------------- ------------ --------
Total equity 118.7 86.4 105.7
------------------------------ ---- -------------- ------------ --------
CONDENSED CONSOLIDATED STATEMENT OF CHANGE IN EQUITY
At 30 September 2023
Other reserves
-----------------------------------------------------------
Share Investment Share Merger Capital Share-based Translation Other Retained Total
capital in own premium reserve redemption payment reserve reserve losses
shares account reserve reserve
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- ----------- -------- -------- ----------- ------------ ------------ -------- --------- ------
Balance at 31
March 59
2023 1.4 - 108.2 .2 0.5 15.5 (9.4) (6.3) (63.3) 105.7
Effect of change
in
functional
currency
(see note 1) - - - - - - 9.4 - (9.4) -
------------------ -------- ----------- -------- -------- ----------- ------------ ------------ -------- --------- ------
Balance at 1 April
2023 1.4 - 108.2 59.2 0.5 15.5 - (6.3) (72.7) 105.7
Profit for the
period - - - - - - - - 9.4 9.4
Issue of share
capital
(net of expenses) - - 0.3 - - - - - - 0.3
Share-based
payments
charge
(net of tax) - - - - - 3.3 - - - 3.3
Movement between
reserves - - - - - (1.7) - - 1.7 -
--------- ------
Balance at 30
September
2023 1.4 - 108.5 59.2 0.5 17.1 - (6.3) (61.6) 118.7
------------------ -------- ----------- -------- -------- ----------- ------------ ------------ -------- --------- ------
At 30 September 2022
Other reserves
-----------------------------------------------------------
Share Investment Share Merger Capital Share-based Translation Other Retained Total Non-controlling Total
capital in premium reserve redemption payment reserve reserve losses interest
own account reserve reserve
shares
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- ----------- -------- -------- ----------- ------------ ------------ -------- --------- ------ ---------------- ------
Balance at 31
March
2022 1.2 - 104.4 22.2 0.5 11.8 (3.0) (3.0) (60.7) 73.4 (1.0) 72.4
(Loss) / Profit
for
the period - - - - - - - - (19.0) (19.0) 0.1 (18.9)
Issue of share
capital
(net of expenses) 0.2 - 3.8 37.0 - - - - (2.0) 39.0 - 39.0
Foreign currency
loss arising on
consolidation - - - - - - (8.3) - - (8.3) - (8.3)
Share-based
payments
charge (net of
tax) - - - - - 2.2 - - - 2.2 - 2.2
Movement between
reserves - - - - - (1.9) - - 1.9 - - -
--------- ------
Balance at 30
September
2022 1.4 - 108.2 59.2 0.5 12.1 (11.3) (3.0) (79.8) 87.3 (0.9) 86.4
------------------ -------- ----------- -------- -------- ----------- ------------ ------------ -------- --------- ------ ---------------- ------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the 6 months ended 30 September 2023
6 months 6 months
ended 30 ended 30 Year ended
September September 31 March
GBPm 2023 2022 2023
------------------------------------------------------------ ---------- ---------- ----------
Cash flows from operating activities
Profit/ (Loss) for the period in continuing
operations 9.4 (11.0) 6.4
Net cash used in operating activities in
discontinued operations (0.6) (6.9) (8.8)
Adjustments for:
Depreciation and amortisation 12.3 14.5 29.0
(Profit)/ Loss on disposal of property,
plant and equipment (0.1) 0.7 0.9
Finance income (2.0) (1.5) (2.9)
Finance costs 3.5 3.8 7.8
Taxation charge/ (credit) 3.8 (0.6) 1.2
Share-based payment charge 3.2 2.2 5.3
(Decrease)/ Increase in provisions (0.8) 3.2 2.7
------------------------------------------------------------ ---------- ---------- ----------
Operating cash flows before movement in
working capital 28.7 4.4 41.6
------------------------------------------------------------ ---------- ---------- ----------
Decrease in inventories 4.7 12.2 9.0
Decrease in trade and other receivables 9.9 9.2 14.7
Decrease in trade and other payables (14.1) (35.3) (43.0)
Net movement in working capital 0.5 (13.9) (19.4)
Taxation (paid)/ received (1.3) 0.7 2.2
------------------------------------------------------------ ---------- ---------- ----------
Cash generated from/ (used in) operating
activities 27.9 (8.8) 24.4
------------------------------------------------------------ ---------- ---------- ----------
Cash flows from investing activities
Proceeds from the sale of property, plant
and equipment - 0.1 0.1
Acquisition of property, plant and equipment (4.1) (1.0) (2.1)
Acquisition of intangible assets - - (0.1)
Net cash (used in)/ generated by investing
activities of
discontinued operations - (0.3) 9.8
------------------------------------------------------------ ---------- ---------- ----------
Cash (used in)/ generated from investing
activities (4.1) (1.2) 7.7
------------------------------------------------------------ ---------- ---------- ----------
Cash flows from financing activities
Proceeds from issue of ordinary share capital 0.3 41.1 41.1
Share issue costs - (2.0) (2.0)
Acquisition of non-controlling interest - - (2.5)
Net (repayment of)/ New borrowings (see
note 9) (7.8) 10.0 (35.0)
Interest paid on borrowings (1.6) (1.7) (3.5)
Interest paid on lease liabilities (2.0) (2.1) (4.2)
Repayment of lease liabilities (9.4) (8.1) (17.7)
Net cash used in financing activities of
discontinued operations - (3.7) (8.6)
Net cash (used in)/ generated from financing
activities (20.5) 33.6 (32.3)
------------------------------------------------------------ ---------- ---------- ----------
Net increase / (decrease) in cash 3.3 23.4 (0.3)
------------------------------------------------------------ ---------- ---------- ----------
Exchange loss on cash & cash equivalents - - (0.1)
------------------------------------------------------------ ---------- ---------- ----------
Cash and cash equivalents at beginning
of period 19.1 19.5 19.5
Cash and cash equivalents at end of period 22.4 42.9 19.1
------------------------------------------------------------ ---------- ---------- ----------
NOTES TO THE FINANCIAL INFORMATION
1. Basis of preparation
The interim financial information was approved by the Board on
21 November 2023. The financial information for the 6 months ended
30 September 2023 has been reviewed by the Group's external
auditor. Their report is included within this announcement. The
financial information for the year ended 31 March 2023 is based on
information in the audited financial statements for that period
which are available online at
https://www.ao-world.com/investor-centre/ .
The comparative figures for the year ended 31 March 2023 are an
abridged version of the Group's full financial statements and,
together with other financial information contained in these
interim results, do not constitute statutory financial statements
of the Group as defined in section 434 of the Companies Act 2006. A
copy of the statutory accounts for the year ended 31 March 2023 has
been delivered to the Registrar of Companies. The auditors have
reported on those accounts and their report was unqualified, did
not draw attention to any matters by way of emphasis and did not
contain a statement under s498(2) or (3) of the Companies Act
2006.
This condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting under UK-adopted
international accounting standards. The annual financial statements
of the Group for the year ending 31 March 2024 will be prepared in
accordance with UK-adopted international accounting standards. As
required by the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority, the condensed set of financial
statements has been prepared applying the accounting policies,
judgements and presentation that were applied in the preparation of
the Company's published consolidated financial statements for the
year ended 31 March 2023.
Certain financial data have been rounded. As a result of this
rounding, the totals of data presented in this document may vary
slightly from the actual arithmetic totals of such data.
Discontinued operations
Following the closure of the German operations in the previous
year, the remaining principal liability of AO Deutschland Limited
is now a GBP denominated intercompany balance and therefore from 1
April 2023, the functional currency of this subsidiary was changed
from Euros to GBP. This has led to previous exchange differences on
translation of foreign operations being recycled to the profit and
loss reserve as set out in the condensed Consolidated Statement of
Changes in Equity.
Furthermore, the German operations are now treated as a
discontinued activity under IFRS5 and the results and cashflows are
therefore shown separately on the face of each of these condensed
primary statements. Further details are included in note 11.
Non-controlling interest
In the prior year, on 22 November 2022, the Company acquired the
remaining 18.4% of issued share capital in AO Recycling Limited for
consideration of GBP2.5m. AO Recycling is now a wholly owned
subsidiary and subsequently there are no non-controlling interests
to report for the period.
Going concern
Notwithstanding net current liabilities of GBP29.4m as at 30
September 2023, the financial statements have been prepared on a
going concern basis which the Directors consider to be appropriate
for the following reasons:
The Group meets its day-to-day working capital requirements from
its cash balances and the availability of its GBP80m revolving
credit facility (which was renewed in April 2023 to now expire in
April 2026). At 31 October 2023 total available liquidity amounted
to GBP103.4m.
The Group annual report and accounts for the year ended 31 March
2023 were signed on 4 July 2023 for which the Directors prepared
base and sensitised cash flow forecasts for the Group which covered
the period to 31 March 2025 ("the going concern period"). The
forecasts indicated that the Group would remain compliant with its
covenants and would have sufficient funds through its existing cash
balances and availability of funds from its revolving credit
facility to meet its liabilities as they fall due for that period.
The forecasts took account of current trading, management's view on
future performance and their assessment of the impact of market
uncertainty and volatility as well as applying sensitivity analysis
for severe but plausible downsides to the base case (full details
can be found in Note 3 of the Group's Annual Report and Accounts
for the year ended 31 March 2023).
The Directors have considered whether the going concern
conclusion for the Group accounts signed on 4 July 2023 is still
appropriate for the assessment of going concern for these interim
financial statements. The results for the first half of FY24
demonstrate positive variances against the base case profitability
and liquidity used and whilst the potential downsides are still
considered plausible, the business has not seen any material impact
during the first half of the year. Therefore, given the going
concern period extended to 31 March 2025, the Directors are
confident that the Group and Company will continue to have
sufficient funds to continue to meet its liabilities as they fall
due for at least 12 months from the date of approval of these
interim financial statements and therefore have prepared the
interim financial statements on a going concern basis.
Critical accounting judgements and key sources of estimation
uncertainty
In the application of the Group's accounting policies, the
Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other
factors that are considered to be relevant and are reviewed on an
ongoing basis.
Actual results could differ from these estimates and any
subsequent changes are accounted for with an effect on income at
the time such updated information becomes available.
Accounting standards require the Directors to disclose those
areas of critical accounting judgement and key sources of
estimation uncertainty which carry a significant risk of causing
material adjustment to the carrying value of assets and liabilities
within the next 12 months.
As a result of macro-economic factors in recent years, the
Directors consider that the revenue recognition in respect of
commission for product protection plans and network connections
include significant areas of accounting estimation. The Directors
have applied the variable consideration guidance in IFRS 15 and as
a result of revenue restrictions do not believe there is a
significant risk of a material downward adjustment. Revenue has
been restricted to ensure that it is only recognised when it is
highly probable and therefore subsequently, there could be a
material reversal of restrictions.
The information below sets out the estimates and judgements used
in recognising revenue in these two areas.
Revenue recognition and recoverability of income from product
protection plans
Revenue recognised in respect of commissions receivable over the
lifetime of the plan for the sale of product protection plans is
recognised in line with the principles of IFRS 15, when the Group
obtains the right to consideration as a result of performance of
its contractual obligations (acting as an agent for a third
party).
Revenue in any one year therefore represents an estimate of the
commission due on the plans sold, which management estimate
reliably based upon a number of key inputs, including:
-- the contractual agreed margins;
-- the number of live plans;
-- the discount rate;
-- the estimated length of the plan;
-- the estimated historic rate of attrition; and
-- the estimated overall performance of the scheme.
Commission receivable also depends for certain transactions on
customer behaviour after the point of sale. Assumptions are
therefore required, particularly in relation to levels of customer
attrition within the contract period, expected levels of customer
spend, and customer behaviour beyond the initial contract period.
Such assumptions are based on extensive historical evidence, and
adjustment to the amount of revenue recognised is made for the risk
of potential changes in customer behaviour, but they are
nonetheless inherently uncertain.
Reliance on historical data assumes that current and future
experience will follow past trends. The Directors believe that the
quantity and quality of historical data available provides an
appropriate proxy for current and future trends. Any information
about future market trends, or economic conditions that we believe
suggests historical experience would need to be adjusted, is taken
into account when finalising our assumptions each year. Our
experience over the last decade, which has been a turbulent period
for the UK economy as a whole, is that variations in economic
conditions have not had a material impact on consumer behaviour
and, therefore, no adjustment to commissions is made for future
market trends and economic conditions.
In assessing how consistent our observations have been, we
compare cash received in a period versus the forecast expectation
for that period as we believe this is the most appropriate check on
revenue recognised. Small variations in this measure support the
assumptions made.
For plans sold prior to 1 December 2016, the commission rates
receivable are based on pre-determined rates. For plans sold after
that date, base-assumed commissions will continue to be earned on
pre-determined rates but overall commissions now include a variable
element based on the future overall performance of the scheme.
Changes in estimates recognised as an increase or decrease to
revenue may be made, where for example, more reliable information
is available, and any such changes are required to be recognised in
the income statement. During the year, management have restricted
revenue in relation to improvements to plan cancellations by
GBP3.5m principally as a result of continued uncertainties in the
wider economic outlook. As with all years, other small refinements
have been made but have had an immaterial impact on the revenue
recognised.
The commission receivable balance as at 30 September 2023 was
GBP93.9m (31 March 2023: GBP93.1m). The rate used to discount the
revenue for the FY24 cohort is 5.80% (2023: 5.45%). The weighted
average of discount rates used in the years prior to FY24 was 4.34%
(2023: 3.91%).
Revenue recognition and recoverability of income in relation to
network commissions
Revenue in respect of commissions receivable from the Mobile
Network Operators ("MNOs") for the brokerage of network contracts
is recognised in line with the principles of IFRS 15, when the
Group obtains the right to consideration as a result of performance
of its contractual obligations (acting as an agent for a third
party).
Revenue in any one year therefore represents an estimate of the
commission due on the contracts sold, which management estimates
reliably based upon a number of key inputs, including:
-- The contractually agreed revenue share percentage - the
percentage of the consumer's spend (to MNOs) to which the Group is
entitled;
-- The discount rate using external market data (including risk
free rate and counter party credit risk) 4.52% (2023: 2.83%);
-- The length of contract entered into by the consumer (12 - 24
months) and the resulting estimated consumer average tenure which
takes account of both the default rate during the contract period
and the expectations that some customers will continue beyond the
initial contract period and generate out of contract ("OOC")
revenue (c4%).
The commission receivable on mobile phone connections can
therefore depend on customer behaviour after the point of sale. The
revenue recognised and associated receivable in the month of
connection is estimated based on all future cash flows that will be
received from the MNO and these are discounted based on the timing
of receipt. This also takes into account the potential clawback of
commission by the MNOs and any additional churn expected as a
result of recent price increases announced and applied by the MNOs,
for which a reduction to revenue is made based on historical
experience.
The Directors consider that the quality and quantity of the data
available from the MNOs Is appropriate for making these estimates
and, as the contracts are primarily for 24 months, the period over
which the amounts are estimated is relatively short. As with
commissions recognised on the sale of product protection plans, the
Directors compare the cash received to the initial amount
recognised in assessing the appropriateness of the assumptions
used.
Changes in estimates recognised as an increase or decrease to
revenue may be made where, for example, more reliable information
is available, and any such changes are required to be recognised in
the income statement. During the year, management have refined the
assessed estimations in relation to the assumed collection of
commissions once customers reach out-of-contract periods based on
the performance in the period. As a result, GBP2.9m of revenue has
been recognised in the period relating to previously restricted
revenue.
The commission receivable balance as at 30 September 2023 was
GBP71.2m (31 March 2023: GBP81.3m). The rate used to discount the
current year revenue is 4.52% (2023: 2.83%).
Other areas of estimation uncertainty
Impairment of intangible assets and goodwill
As part of the acquisition of Mobile Phones Direct Limited in
2018, the Group recognised amounts totalling GBP16.3m in relation
to the valuation of the intangible assets and GBP14.7m in relation
to residual goodwill. At 30 September 2023 the carrying value
amounted to GBP22.5m.
Goodwill and intangible assets are reviewed for impairment if
events or changes in circumstances indicate that the carrying
amount may not be recoverable. If no event, goodwill is reviewed
for impairment on an annual basis. When a review for impairment is
conducted, the recoverable amount is determined based on the higher
of value in use and fair value less costs to dispose ("FVLCOD").
The value in use method requires the Group to determine appropriate
assumptions (which are sources of estimation uncertainty) in
relation to the cash flow projections over the forecast period, the
long-term growth rate to be applied beyond the initial period and
the risk adjusted pre-tax discount rate used to discount the
assumed cash flows to present value.
Whilst at 30 September 2023 the Directors have concluded that
the carrying value of the intangibles and goodwill is appropriate,
significant changes in assumptions, which could be driven by the
end customer behaviour with the Mobile Network Operators, could
give rise to an impairment in the carrying value.
2. Revenue
The table below shows the Group's revenue by each major business
area. All revenue is accounted for at a point in time as the Group
has satisfied its performance obligations on the sale of its
products/services.
Major product/services lines
6 months 6 months Year
ended 30 September 2023 ended 30 September 2022 ended 31
GBPm March 2023
------------------------------ ------------------------ ------------------------ -----------
Product revenue 370.3 432.5 874.8
Service revenue 30.4 23.3 56.2
Commission revenue 56.7 65.9 156.4
Third-party logistics revenue 13.2 12.9 27.6
Recycling revenue 11.1 11.7 23.6
------------------------------ ------------------------ ------------------------ -----------
481.7 546.3 1,138.5
------------------------------ ------------------------ ------------------------ -----------
3. Segmental analysis
Previously, the Group had two reportable segments; online
retailing of domestic appliances and ancillary services to
customers in the UK, and online retailing of domestic appliances
and ancillary services to customers in Germany. Following the
decision in June 2022 to close the German operations (which are now
treated as discontinued), the UK operation is now the only
reportable segment.
Operating segments are determined by the internal reporting
regularly provided to the Group's Chief Operating Decision Maker.
The Chief Operating Decision Maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Executive Directors and has
determined that the UK operations now form three reportable
segments after considering the threshold guidance in IFRS 8, being
retail, logistics and recycling.
However, having consideration for the economic characteristics
of each of these segments including the nature of products and
services, the type of customer and methods used to distribute
product, the Chief Operating Decision Maker has concluded that the
majority of the Group's business is retail related and has
determined it is appropriate to aggregate these segments into one
reportable segment.
4. Finance income
6 months 6 months
ended 30 ended 30 Year ended
September September 31 March
GBPm 2023 2022 2023
-------------------------------------- ----------- ----------- -----------
Unwind of discounting on non-current
contract assets 2.0 1.5 2.9
2.0 1.5 2.9
-------------------------------------- ----------- ----------- -----------
5. Finance costs
6 months 6 months Year ended
ended 30 ended 30 31 March
September September 2023
GBPm 2023 2022
------------------------------- ----------- ----------- -----------
Interest on lease liabilities 2.0 2.1 4.2
Interest on borrowings 0.8 1.4 2.3
Other finance costs 0.8 0.3 1.2
3.5 3.8 7.8
------------------------------- ----------- ----------- -----------
6. Goodwill
GBPm
------------------------------------------ ------
Carrying value at 30 September 2023 and
30 September 2022 28.2
------------------------------------------ ------
Goodwill relates to the purchase of Expert Logistics Limited,
the purchase by DRL Holdings Limited (now AO World PLC) of DRL
Limited (now AO Retail Limited), the acquisition of AO Recycling
Limited (formerly The Recycling Group Limited) and the acquisition
of Mobile Phones Direct Limited (now AO Mobile Limited) by AO
Limited.
Impairment of goodwill
UK CGU - GBP13.5m
At 30 September 2023, goodwill acquired through UK business
combinations (excluding Mobile Phones Direct Limited) was allocated
to the UK cash-generating unit ("CGU") which is part of the UK
operating segment.
This represents the lowest level within the Group at which
goodwill is monitored for internal management purposes.
The Group performed its annual impairment test as at 31 March
2023. The recoverable amount of the CGU was determined based on the
value in use calculations. The Group prepared cash flow forecasts
derived from the most recent financial budget and financial plan
for three years, and extrapolated cash flows for the following
years, up until year five, based on an estimated growth rate of 1%.
This rate does not exceed the average long term growth rate for the
market. The final year cash flow is used to calculate a terminal
value.
During the six months ended 30 September 2023, there have been
no significant changes in the assumptions or performance of the
related businesses which would indicate an impairment test is
required at 30 September 2023.
AO Mobile - GBP14.7m
At 30 September 2023, the goodwill allocated to the Mobile cash
generating unit ("CGU") was GBP14.7m. In addition to goodwill, at
30 September 2023 other intangibles stood at GBP7.8m.
The Group performed a full annual impairment test as at 31 March
2023 which showed there was headroom against the carrying
value.
During the second quarter of the current period, a significant
reduction in demand for new connections, partly driven by the
significant inflationary increases applied by the networks, was
evident and this trend of reduced demand is expected to continue
through to the year end. With the results of the mobile business
partly reliant on volume related targets, competition in the mobile
market for a smaller number of connections has had a material
adverse effect on the results and expected outturn of the mobile
business for the current financial period compared to the forecasts
used in the annual impairment review and as a result management
considered this to be a trigger to perform an updated full
impairment review at 30 September 2023.
Consequently, management have assessed the recoverable amount of
the CGU using a value in use model. This has been based on
management's Board approved forecast cashflows for the business
up-to FY28 with the final year being the basis for a perpetuity
calculation.
The forecasts are therefore dependent on a number of key
assumptions and these include:
-- Revenue growth of 4% based on the amount expected to be
applied by the networks over and above inflation each year and
considering the outlook for addressable markets;
-- Total cost inflation and cost savings- between +4% and -2.5%
based on publicly available expectations for inflation, managements
estimate of product price changes based on industry knowledge and
reductions in brand spend beyond year 1; and
-- Pre-tax discount rate - 12.6% based on the capital structure
of an equivalent business and reflecting market risk and volatility
due to current macro-economic uncertainty.
The total recoverable amount of the CGU is greater than it's
carrying value by GBP0.8m in managements base case and therefore no
impairment is required. However, given the minimal amount of
headroom at 30 September 2023, reasonably plausible changes in
assumptions could lead to a material impairment in the future as
demonstrated below:
Key assumption Sensitivity applied Headroom/(impairment)
Revenue growth per No growth in revenue (GBP12.9m)
year to FY28 with corresponding
reduction in purchases
applied.
--------------------------- ----------------------
Cost inflation and Increase of 5% in (GBP4.8m)
savings per year to total costs and reduction
FY28 of 5% in savings
--------------------------- ----------------------
Pre-tax discount rate Increase/Decrease (GBP4.2m)/ GBP7.3m
of 1%
--------------------------- ----------------------
7. Trade and other receivables
30 September 30 September 31 March
GBPm 2023 2022 2023
-------------------------------- ------------- ------------- ---------
Trade receivables 20.2 26.7 21.6
Contract assets 165.1 167.7 174.4
Prepayments and accrued income 37.1 43.5 34.9
Other receivables 0.1 0.6 0.2
-------------------------------- ------------- ------------- ---------
222.5 238.5 231.1
-------------------------------- ------------- ------------- ---------
The trade and other receivables are classified as:
30 September 30 September 31 March
GBPm 2023 2022 2023
-------------------- ------------- ------------- ---------
Non-current assets 89.5 89.1 93.3
Current assets 133.0 149.4 137.8
-------------------- ------------- ------------- ---------
222.5 238.5 231.1
-------------------- ------------- ------------- ---------
All of the amounts classified as non-current assets relate to
contract assets.
Contract assets
Contract assets represent the expected future commissions
receivable in respect of product protection plans and mobile phone
connections. The Group recognises revenue in relation to these
plans and connections when it obtains the right to consideration as
a result of performance of its contractual obligations (acting as
an agent for a third party). Revenue in any one year therefore
represents the estimate of the commission due on the plans sold or
connections made.
The reconciliation of opening and closing balances for contract
assets is shown below:
30 September 30 September 31 March
GBPm 2023 2022 2023
------------------------ ------------ ------------ --------
Balance brought forward 174.4 174.1 174.1
Revenue recognised 51.3 61.2 148.7
Cash received (65.8) (71.2) (154.0)
Revisions to estimates 3.2 2.1 2.7
Unwind of discounting 2.0 1.5 2.9
Balance carried forward 165.1 167.7 174.4
------------------------ ------------ ------------ --------
During the period, revenue of GBP0.3m which had been recognised
in periods up to 31 March 2023 was reversed. This is included in
the revisions to estimates above.
In relation to revenue from network connections, an amount of
GBP3.5m was recognised in the period which had been restricted at
31 March 2023. This is included in the revisions to estimates
above.
The Group still recognises that there is inherent risk in the
amount of revenue recognised as it is dependent on future customer
behaviour which is outside of the Group's control and therefore at
30 September 2023 amounts of GBP3.5m and GBP1.6m have been
constrained in relation to revenue recognised in relation to
product protection plans and network commissions respectively.
Product protection plans
Under our arrangement with Domestic & General ("D&G"),
the Group receives commission in relation to its role as agent for
introducing its customers to D&G and recognises revenue at the
point of sale as it has no future obligations following this
introduction. A discounted cash flow methodology is used to measure
the estimated value of the revenue and contract assets in the month
of sale of the relevant plan, by estimating all future cash flows
that will be received from D&G and discounting these based on
the expected timing of receipt. Subsequently, the contract asset is
measured at the present value of the estimated future cash flows.
The key inputs into the model which forms the base case for
management's considerations are:
-- the contractually agreed margins, which differ for each
individual product covered by the plan as is included in the
agreement with D&G;
-- the number of live plans based on information provided by D&G;
-- the discount rate for plans sold in the year using external
market data - 5.80% (2023: 5.45%);
-- the estimate of profit share relating to the scheme as a
whole based on information provided by D&G;
-- historic rate of customer attrition that uses actual
cancellation data for each month for the previous 8 years to form
an estimate of the cancellation rates to use by month going forward
(range of 0% to 9.0% weighted average cancellation by month);
and
-- the estimated length of the plan based on historical data
plus external assessments of the potential life of products (5 to
16 years).
The last two inputs are estimated based on extensive historical
evidence obtained from our own records and from D&G. The Group
has accumulated historical empirical data over the last 15 years
from c.3.3m plans that have been sold. Of these, c.1.08m are live.
Applying all the information above, management calculates their
initial estimate of commission receivable. Consideration is then
given to other factors outside of the historical data noted above
that could impact the valuation. This primarily considers the
reliance on historical data as this assumes that current and future
experience will follow past trends. There is, therefore, a risk
that changes in consumer behaviour could reduce or increase the
total cash flows ultimately realised over the forecast period.
Management makes a regular assessment of the data and assumptions
with a detailed review at half year and full year to ensure this
continues to reflect the best estimate of expected future trends.
As set out in Note 1, the Directors do not believe there is a
significant risk of a downward material adjustment to the revenue
recognised in relation to these plans over the next 12 months. The
sensitivity analysis below is disclosed as we believe it provides
useful insight to the users of the financial statements into the
factors taken into account when calculating the revenue to be
recognised.
The table shows the sensitivity of the carrying value of the
commission receivables and revenue to a reasonably possible change
in inputs to the discounted cash flow model over the next 12
months.
Impact on
contract asset
and revenue
Sensitivity GBPm
--------------------------------------------- ---------------
Cancellations increase by 2% (1.9)
Cancellation rate reduces by 2% 2.0
Profit share increases or (decreases) by 10% 1.3 / (1.3)
--------------------------------------------- ---------------
Cancellations
The number of cancellations and therefore the cancellation rate
can fluctuate based on a number of factors. These include
macroeconomic changes e.g., unemployment, but will also reflect the
change in nature of the plan itself (insurance plan vs service
plan). The impact of reasonable potential changes is shown in the
sensitivities above.
Profit share
The profit share attaching to the overall scheme is dependent on
factors such as the price of the plan, the cost of claims and the
administration of the scheme itself. Given changes in
macro-economic conditions, there is an increased risk that claims
cost could increase but also the possibility that to counter any
increase in cost that D&G could further increase the price per
plan. The above sensitivity considers what any reasonable change in
either of these could mean to the overall profit share.
Network commissions
The Group operates under contracts with a number of Mobile
Network Operators ("MNOs"). Over the life of these contracts, the
service provided by the Group to each MNO is the procurement of
connections to the MNO's networks. The individual consumer enters
into a contract with the MNO for the MNO to supply the ongoing
airtime over that contract period. The Group earns a commission for
the service provided to each MNO. Revenue is recognised at the
point the individual consumer signs a contract and is connected
with the MNO. Consideration from the MNO becomes receivable over
the course of the contract between the MNO and the consumer. The
Group has determined that the number and value of consumers
provided to each MNO in any given month represents the measure of
satisfaction of each performance obligation under the contract. A
discounted cash flow methodology is used to measure the estimated
value of the revenue and contract assets in the month of
connection, by estimating all future cash flows that will be
received from the MNOs and discounting these based on the expected
timing of receipt. Subsequently, the contract asset is measured at
the present value of the estimated future cash flows.
The key inputs to management's base case model are:
-- revenue share percentage, i.e. the percentage of the
consumer's spend (to the MNO) to which the Group is entitled;
-- the discount rate using external market data - 4.52% (31 March 2023: 2.83%);
-- the length of contract entered into by the consumer (12 - 24
months) and the resulting estimated consumer average tenure that
takes account of both the default rate during the contract period
and the expectations that some customers will continue beyond the
initial contract period and generate out of contract revenue.
The input is estimated based on extensive historical evidence
obtained from the networks, and adjustment is made for the risk of
potential changes in consumer behaviour. Applying all the
information above, management calculates their initial estimate of
commission receivable. Consideration is then given to other factors
outside of the historical data noted above which could impact the
valuation. This primarily considers the reliance on historical data
as this assumes that current and future experience will follow past
trends.
The risk remains that changes in consumer behaviour could reduce
or increase the total cash flows ultimately realised over the
forecast period. Management make a regular assessment of the data
and assumptions with a detailed review at half year and full year
to ensure this continues to reflect the best estimate of expected
future trends and appropriate revisions are made to the estimates.
As set out in Note 1, the Directors do not believe there is a
significant risk of a downward material adjustment to the revenue
recognised in relation to these plans over the next 12 months given
the variable revenue constraints applied albeit there could be a
material upward adjustment.
The sensitivity analysis below is disclosed as we believe it
provides useful insight to the users of the financial statements by
giving insight into the factors taken into account when calculating
the revenue to be recognised. The table shows the sensitivity of
the carrying value of the commission receivables and revenue to a
reasonably possible change in inputs to the discounted cash flow
model over the next 12 months, having taken account of the changes
in behaviour experienced in the period.
Impact on
contract
asset and
revenue
Sensitivity GBPm
-------------------------------------------------- -----------
2% decrease/ (increase) in expected cancellations 1.9/ (1.9)
- in contract
-------------------------------------------------- -----------
Cancellations
The number of cancellations, and therefore the cancellation
rate, can fluctuate based on a number of factors. These include
macroeconomic changes e.g., unemployment, interest rates and
inflation. The impact of reasonable potential changes is shown in
the sensitivities.
Prepayments and accrued income
At 30 September 2023, included in prepayments and accrued income
is GBP8.7m (30 September 2022: GBP12.3m) in relation to volume
rebates receivable. The amounts are largely coterminous and are
mainly agreed in the month after recognition.
At 31 October 2023, the balance outstanding was GBP1.0m (31
October 2022: GBP3.5m).
8. Trade and other payables
30 September 30 September 31 March
GBPm 2023 2022 2023
Trade payables 149.5 172.8 163.4
Accruals 25.7 25.1 19.4
Contract liabilities 32.0 34.4 37.2
Deferred income 16.1 17.3 14.2
Other payables 16.4 16.6 20.1
---------------------- ------------- ------------- ---------
239.7 266.2 254.3
---------------------- ------------- ------------- ---------
Contract liabilities includes payments on account from Mobile
Network Operators where there is no right of set off with the
contract asset and cashback liabilities due to the end customer
within the mobile business.
The trade and other payables are classified as:
30 September 30 September 31 March
GBPm 2023 2022 2023
----------------------- ------------- ------------- ---------
Current liabilities 236.8 262.6 249.5
Long-term liabilities 2.9 3.6 4.8
----------------------- ------------- ------------- ---------
239.7 266.2 254.3
----------------------- ------------- ------------- ---------
9. Net funds/ (debt) and movement in financial liabilities
30 September 30 September 31 March
GBPm 2023 2022 2023
-------------------------------------- ------------- ------------- ---------
Cash and cash equivalents 22.4 42.9 19.1
Borrowings - Repayable within
one year (0.2) (55.0) (10.0)
Borrowings - Repayable after (2.0) - -
one year
Finance lease liabilities -
Repayable within one year (1.8) (1.9) (1.9)
Finance lease liabilities -
Repayable after one year (2.8) (4.6) (3.6)
-------------------------------------- ------------- ------------- ---------
Net funds/ (debt) (excluding
leases relating to right of use
assets) 15.6 (18.6) 3.6
Right of use asset lease liabilities
-
Repayable within one year (15.2) (16.9) (15.8)
Right of use asset lease liabilities
-
Repayable after one year (55.2) (66.8) (63.9)
-------------------------------------- ------------- ------------- ---------
Net debt (54.8) (102.3) (76.1)
-------------------------------------- ------------- ------------- ---------
Whilst not required by IAS 1 Presentation of Financial
Statements, the Group has elected to disclose its lease liabilities
split by those which ownership transfers to the Group at the end of
the lease ("Owned asset lease liabilities") and, for 31 March 2023
comparatives, are disclosed within the Property Plant and Equipment
table of the Group financial statements, and those leases which are
rental agreements and where ownership does not transfer to the
Group at the end of the lease as Right of use asset lease
liabilities which are disclosed within the Right of use assets
table in the Group financial statements. This is to give additional
information that the Directors feel will be useful to the
understanding of the business.
The movement in financial liabilities in the period ending 30
September 2023 was as follows:
Lease
GBPm Borrowings Liabilities
---------------------------------------- ---------- ------------
Balance at 1 April 2023 10.0 85.3
Changes from financing cash flows
New borrowings 2.2 -
Repayment of borrowings (10.0) -
Repayment of lease liabilities - (9.4)
Payment of interest (0.8) (2.0)
---------------------------------------- ---------- ------------
Total changes from financing cash flows (8.6) (11.4)
---------------------------------------- ---------- ------------
Other changes
New leases - 0.9
Interest expense 0.8 2.0
Reassessment of lease terms - (1.8)
Total other changes 0.8 1.1
---------------------------------------- ---------- ------------
Balance at 30 September 2023 2.2 75.0
---------------------------------------- ---------- ------------
On 6 April 2023, the Group entered into a new GBP80m Revolving
Credit Facility which replaced the existing revolving credit
facility and expires in April 2026. The total amount drawn at 30
September was GBP3.7m which relates to letters of
credit/guarantees.
On 14 July, AO Recycling Limited, a wholly owned subsidiary,
acquired the land and building at its Halesfield site for GBP3.5m.
This was partly funded by a ten year commercial mortgage from HSBC
of GBP2.2m which is shown as New borrowings in the reconciliation
above.
Lease
GBPm Borrowings Liabilities
---------------------------------------- ---------- ------------
Balance at 1 April 2022 45.0 108.6
Changes from financing cash flows
New Borrowings 10.0 -
Repayment of lease liabilities - (8.1)
Capital repayments of lease liabilities
in Germany - (7.2)
Payment of interest (1.4) (2.1)
---------------------------------------- ---------- ------------
Total changes from financing cash flows 8.6 (17.4)
---------------------------------------- ---------- ------------
Other changes
New leases - 3.1
Interest expense 1.4 2.1
Reassessment of lease terms - (7.2)
Foreign exchange differences - 1.0
---------------------------------------- ---------- ------------
Total other changes 1.4 (1.0)
---------------------------------------- ---------- ------------
Balance at 30 September 2022 55.0 90.2
---------------------------------------- ---------- ------------
10. Financial Instruments
As detailed in the Group's most recent annual financial
statements, our principal financial instruments consist of trade
and other receivables, accrued income, cash and cash equivalents,
trade and other payables and leases and borrowings. As indicated in
Note 1, there have been no changes to the accounting policies for
financial instruments, from those disclosed in the Company's Annual
Report at 31 March 2023.
There have been no changes to the categorisation or fair value
hierarchy (level three) of our financial instruments. The fair
values of cash and cash equivalents, trade and other receivables,
accrued income, and trade and other payables, leases and borrowings
are all deemed to approximate their carrying values and these can
be identified on the face of the Statement of Financial Position
and accompanying notes.
11. Discontinued operations
In June 2022, the Group announced that it had taken the decision
to close its business in Germany. As a consequence, the German
operations are treated as a discontinued activity under IFRS5. The
tables below show the results and cashflows of the German operation
for the relevant reporting periods.
Income Statement of discontinued operations
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
GBPm 2023 2022 2023
--------------------------------- ------------- ------------- ---------
Revenue 0.1 36.4 36.2
Expenses (0.1) (47.4) (47.5)
--------------------------------- ------------- ------------- ---------
Loss before tax - (11.0) (11.3)
Taxation credit / (charge) - 0.5 (0.1)
--------------------------------- ------------- ------------- ---------
Loss after tax - (10.5) (11.4)
Gain on remeasurement of assets - 2.6 2.6
Loss after tax of discontinued
operations - (7.9) (8.8)
--------------------------------- ------------- ------------- ---------
Cash flow statement
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
GBPm 2023 2022 2023
----------------------------------------- ------------- ------------- ---------
Net cash flows from operating activities (0.6) (6.9) (8.8)
Net cash flows from investing activities - (0.3) 9.8
Net cash flows from financing activities - (3.7) (8.6)
----------------------------------------- ------------- ------------- ---------
12. Principal risks and uncertainties
There are a number of potential risks and uncertainties which
could have a material impact on the Group's performance over the
remaining six months of the financial year and could cause actual
results to differ materially from expected or historical results.
The Directors do not consider that the principal risks and
uncertainties have changed materially since the publication of the
Annual Report for the year ended 31 March 2023.
The principal risks as set out in the Annual Report are
summarised below and further information on these together with
information as to how the Group seeks to mitigate these risks is
set out on pages 41-44 inclusive of the Annual Report and Accounts
2023 which can be found at www.ao-world.com :
-- Risks relating to our culture and people.
-- Risk relating to IT systems resilience, cyber security and agility.
-- Risks relating to compliance failures or to changes in laws
and regulations, in particular Data protection and privacy
legislation, the basis upon which the Group offers and sells
product protection plans and driver employment status.
-- Risks of business interruption.
-- Risks relating to the UK electricals market encompassing a
challenging macro-economic environment and competitive
conditions.
-- Risks relating to our key commercial relationships and supply chain.
-- Risks relating to our funding and liquidity.
-- Risks in relation to significant accounting matters including
revenue recognition and contract asset recoverability in relation
to product protection plans, revenue recognition and contract asset
recoverability in relation to network commissions and the carrying
value of goodwill and intangible assets arising on the acquisition
of AO Mobile Ltd .
-- Emerging risks in relation to extended producer
responsibilities and the Governments Resources and Waste Strategy
together with their link to climate change, and the emerging
opportunities/risks relating to Artificial Intelligence.
Responsibility statement
Responsibility statement of the directors in respect of the
half-yearly financial report
We confirm that to the best of our knowledge:
-- The condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted
for use in the UK;
-- The interim management report includes a fair review of the information required by:
(a)DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(b)DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
On behalf of the Board
John Roberts Mark Higgins
CEO CFO
21 November 2023 21 November 2023
INDEPENT REVIEW REPORT TO AO WORLD PLC
Conclusion
We have been engaged by AO World Plc ("the Company") to review
the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2023 which
comprises Condensed Consolidated Income Statement, Condensed
Consolidated Statement of Comprehensive Income, Condensed
Consolidated Statement of Financial Position, Condensed
Consolidated Statement of Changes in Equity, Condensed Consolidated
Statement of Cash Flows and the related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2023 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted for
use in the UK and the Disclosure Guidance and Transparency Rules
("the DTR") of the UK's Financial Conduct Authority ("the UK
FCA").
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity ("ISRE (UK) 2410") issued for use in the UK. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. We
read the other information contained in the half-yearly financial
report and consider whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed
set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention that causes us to believe that the directors have
inappropriately adopted the going concern basis of accounting, or
that the directors have identified material uncertainties relating
to going concern that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410. However, future events or
conditions may cause the Group to cease to continue as a going
concern, and the above conclusions are not a guarantee that the
Group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with UK-adopted international
accounting standards.
The directors are responsible for preparing the condensed set of
financial statements included in the half-yearly financial report
in accordance with IAS 34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the
directors are responsible for assessing the Group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review. Our conclusion, including our
conclusions relating to going concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for conclusion section of this report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
David Neale
For and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
21 November 2023
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