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Friday 07 February, 2014

DRL Holdings Ltd

AO - Intention to Float

RNS Number : 5227Z
DRL Holdings Limited
07 February 2014
 



NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO, OR WITHIN THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE SUCH AN ANNOUNCEMENT WOULD BE UNLAWFUL

 

This announcement is an advertisement and not a prospectus. It does not constitute an offer for sale or subscription or to buy any securities. Investors should not subscribe for or purchase any securities referred to in this announcement except on the basis of information in the prospectus (the "Prospectus") to be published by DRL Holdings Limited, to be re-registered and renamed as AO plc ("AO" or the "Company" and, together with its subsidiaries, the "Group"), in due course in connection with the proposed admission of its ordinary shares (the "Shares") to the premium listing segment of the Official List of the UK Financial Conduct Authority and to trading on the London Stock Exchange plc's Main Market for listed securities. Copies of the Prospectus will, following publication, be available for inspection from the Company's registered office.

 

 

 

 

7 February 2014

 

DRL Holdings Limited, to be re-registered and renamed as AO plc

 

Announcement of intention to float on the London Stock Exchange

 

 

AO announces its intention to launch an initial public offering (the "Offer"). The Company intends to apply for admission of the whole of its ordinary share capital, issued and to be issued, to the premium listing segment of the Official List of the UK Financial Conduct Authority and to trading on the Main Market for listed securities of the London Stock Exchange plc (together, "Admission"). It is expected that Admission will occur in March 2014.

 

AO is the United Kingdom's leading online retailer of major domestic appliances measured by 2012 market share according to a report by OC&C commissioned by AO (the "OC&C Report"). AO sources, sells and delivers major domestic appliances, as well as a range of small domestic appliances. AO's sales activities are focused primarily on sales of domestic appliances through the Group's own branded websites, principally AO.com. AO's activities also include third-party branded website and trade sales, as well as the provision of ancillary services (including delivery, installation and recycling services and sales of third-party product protection plans) to AO website and third-party branded website customers and the provision of logistics services to third-party clients.

 

AO's Highlights

 

Market leader in growing UK online market for major domestic appliances

·      In 2012, AO had a 24 per cent. share of the online market for major domestic appliances in the United Kingdom, of which 19 per cent. represented AO website sales, and 5 per cent. represented third-party branded website sales according to the OC&C Report.

·      AO believes that the Group is well positioned to benefit from further growth in the UK online market for major domestic appliances, which the OC&C Report projects will grow at a compound annual growth rate of approximately 11 per cent. from 2013 to 2016.

 

AO has a market-leading customer proposition and focus on customer service

·      AO offers its customers approximately 4,000 Stock Keeping Units ("SKUs") from over 30 appliance brands across a range of price points, competitive pricing with a "price match promise" and delivery, product installation, removal and recycling services seven days a week.

 

AO has specialist in-house delivery and logistics services enabling an integrated end-to-end retail experience with structural advantages over competitors

·      AO benefits from control over the entire customer experience from online purchase through to delivery.

·      The Group's specialist in-house delivery and logistics service enables AO to offer flexible and reliable delivery, seven days a week, to nearly all mainland UK postcodes.

·      For approximately 80 per cent. of SKUs and a majority of UK postcodes, AO offers same-day delivery for orders placed before noon and next-day delivery for orders placed before midnight.

 

AO has a strong track record of revenue growth, profitability and cash generation

·      From the fiscal year ended 31 March 2011 to 31 March 2013:

Revenue increased at a compound annual growth rate of 29.6 per cent. to £275.5 million.

EBITDA1 increased at a compound annual growth rate of 57.0 per cent. to £10.7 million.

 

AO has an experienced and entrepreneurial management team and strong culture with high employee engagement levels and dedication to delivering high quality customer service

·      Led by its co-founder and largest shareholder John Roberts, the experienced and entrepreneurial management team has successfully developed and expanded the Group's business during periods of challenging market conditions and with a limited capital base.

·      AO believes the Group has a strong and experienced Board of Directors to help support AO's growth strategy.

·      AO believes the Group has a strong culture that enables it to attract high quality personnel, maintain a high retention rate of key staff and create a work force dedicated to delivering high quality customer service.

 

Multiple growth opportunities that AO is considering

·      AO intends to expand its range of products and services

AO has recently expanded the product range on AO.com to include certain small domestic appliances.

AO believes that the characteristics of the UK market for televisions (and in particular large televisions) would complement the Group's strengths.

AO recently began offering AO.com customers in certain UK postcodes premium installation services, including gas appliance installation services and installation services for certain appliances which require hardwiring or other more complicated installations.

·      AO intends to evaluate expansion opportunities in Europe, initially in Germany

The overall market for major domestic appliances in Germany in 2012 amounted to total sales value (including VAT) of approximately £6.6bn, according to the OC&C Report.2

In the longer term, AO may consider expansion opportunities in other markets in Europe.

 

 

On Admission, the Board of AO will consist of an experienced set of Directors with extensive, complementary experience in the online and retail sectors. Richard Rose will retain his role as Non-Executive Chairman of the Group and he will be joined by Brian McBride as Senior Independent Non-Executive Director and Marisa Cassoni and Rudolf Lamprecht as Independent Non-Executive Directors. The remaining Board members will be John Roberts (Chief Executive Officer), Steve Caunce (Chief Financial Officer & Chief Operating Officer), Charles (Bill) Holroyd and Christopher Hopkinson (both Non-Executive Directors).

 

Commenting on today's announcement, John Roberts, Co-Founder and Chief Executive Officer of AO, said:

 

"AO comes to market with a leading customer proposition that I believe will appeal to the consumers of both today and tomorrow. We aim to put the customer first in everything we do and are fanatical about offering customers amazing service and competitive pricing.

 

"AO has a strong track record of revenue growth and profitability and I am excited about the opportunities ahead as we continue to grow our new AO.com brand. We are exploring opportunities to expand the range of products and services that we offer and to internationalise our business. I believe these initiatives have the potential to deliver a significant change in terms of our addressable market and that a London listing will give us the platform to continue to grow our business. Ultimately, it is our ambition to be a leading European online electrical retailer.

 

"I have never been more excited about our business and the ability of our team to deliver on our vision for the future."

 

Overview of the Offer

·      The Offer will comprise of an offer of new Shares to be issued by the Company (to raise gross proceeds of approximately £60 million) and an offer of existing Shares to be sold by the selling shareholders.

·      The Directors believe that the Offer will provide additional capital to support the growth of the Group, with benefits including the enhancement of its service capability and product offering, potential European expansion, a reduction of exposure to third-party credit insurer sentiment and an ability to secure improved commercial terms from suppliers. The Offer will also provide the selling shareholders with a partial realisation of their investment in the Company.

·      The selling shareholders will include some of the Company's Directors, senior management and business angel investors who have supported the growth of the Group to date. Following Admission, the Company and selling shareholders (excluding Directors) will be subject to a 180-day lock-up period, whilst the Directors will be subject to a 360-day lock-up period.

·      It is intended that an over-allotment option of up to 15 per cent. of the total offer size will be made available by the selling shareholders.

·      Following the Offer, the UK Listing Authority's minimum free float requirements will be satisfied with current free float expectations of at least 25 per cent. of the issued share capital of the Company. 

·      It is expected that the Offer will complete in March 2014 and that the Company will be eligible for inclusion in the FTSE UK Index Series at the quarterly review in June 2014.

·      In relation to the Offer, Jefferies International Limited ("Jefferies") and J.P. Morgan Securities plc (which conducts its UK investment banking activities as J.P. Morgan Cazenove ("J.P. Morgan Cazenove")) are acting as Joint Global Co-ordinators, Joint Bookrunners and Joint Sponsors. Numis Securities Limited ("Numis") is acting as Joint Bookrunner and Rothschild is acting as Financial Adviser to the Company.

 

 

1 EBITDA means earnings before interest, taxes, depreciation and amortisation and is calculated by the Group by adding depreciation and amortisation to operating profit/(loss), in each case to be determined in accordance with IFRS. EBITDA is an unaudited supplementary measure of the Group's performance that is not required by, or presented in accordance with, IFRS or UK GAAP.

2 OC&C Report, referencing Euromonitor International. The market data for Germany may not be prepared on the same basis as that used by OC&C

in connection with the UK market data included elsewhere in this announcement.

 

ENQUIRIES

 

AO

+44(0)120 467 2405

John Roberts

Steve Caunce




Joint Global Co-ordinators, Joint Bookrunners and Joint Sponsors


Jefferies

Nick Adams

Ben Bailey

Lee Morton

Max Jones

+44(0)20 7029 8000


J.P. Morgan Cazenove

Greg Chamberlain

Luke Bordewich

Christopher Nicholls

Charles Pretzlik

 

+44(0)20 7742 7000

Joint Bookrunner




Numis Securities

Alex Ham

Mark Lander

Oliver Cardigan

 

+44(0)20 7260 1000

Financial Adviser




Rothschild

Andrew Thomas

Jonathan Finn

Bod Buckby

+44(0)161 827 3800/+44(0)20 7280 5000

 

 



Financial Public Relations




Instinctif Partners


Matthew Smallwood

Justine Warren

Jamie Ramsay

+44(0)20 7457 2020

 

About AO

 

AO is the United Kingdom's leading online retailer of major domestic appliances measured by 2012 market share, according to the OC&C Report. AO sources, sells and delivers major domestic appliances, including washing machines, washer dryers, tumble dryers, dishwashers, refrigerators, freezers, ovens, range cookers and microwaves, as well as a range of small domestic appliances, including vacuums, floor cleaners, coffee machines, mixers and food processors. AO's sales activities are focused primarily on sales of appliances through the Group's own branded websites, principally AO.com. AO's sales also include third-party branded website sales, where the Group builds and operates third-party branded websites and sources and delivers appliances to fulfil customer orders generated through these websites, and trade sales, where the Group fulfils orders generated by third-party retailers and product protection plan providers by sourcing and delivering appliances. The Group also offers ancillary services to its AO website and third-party branded website customers, including delivery, installation, removal and recycling services and sales of third-party product protection plans.

 

AO Key Strengths

 

Market leader in growing UK online market for major domestic appliances

 

AO had the largest market share of the UK online market for major domestic appliances in 2012, according to the OC&C Report. In 2012, AO had an approximately 24 per cent. share of the online market for major domestic appliances in the United Kingdom, of which approximately 19 per cent. represented AO website sales, according to the OC&C Report. Between 2010 and 2012, AO was the fastest growing retailer of major domestic appliances, gaining approximately 4 per cent. market share of the overall market for major domestic appliances in the United Kingdom, according to the OC&C Report.

 

The online market for major domestic appliances in the United Kingdom grew from sales value (including VAT) of approximately £0.7 billion in 2010 to approximately £1.1 billion in 2012, a compound annual growth rate of 25 per cent., according to the OC&C Report. AO website sales increased from £76.1 million for the year ended 31 March 2011 to £198.0 million for the year ended 31 March 2013, a compound annual growth rate of 61.3 per cent. The OC&C Report projects that the online market for major domestic appliances in the United Kingdom will grow from sales value (including VAT) of approximately £1.1 billion in 2012 to approximately £1.8 billion in 2016, a compound annual growth rate of 13 per cent. As the UK online market leader for major domestic appliances, AO believes that the Group is well positioned to benefit from further growth in the UK online market for major domestic appliances.

 

Market-leading customer proposition and focus on customer service

 

AO believes it has developed a market-leading customer proposition in online major domestic appliances retailing in the United Kingdom. AO offers its customers approximately 4,000 SKUs from over 30 appliance brands across a range of price points, competitive pricing with a "price match promise" and delivery, product installation, removal and recycling services seven days a week. AO seeks to maintain high levels of product availability and offers, for approximately 80 per cent. of SKUs and a majority of UK postcodes, same-day delivery for orders placed before noon and next-day delivery for orders placed before midnight. AO believes that it offers same-day and next-day delivery options on a significantly broader range of SKUs than its key competitors.

 

AO believes that its online platform, which includes detailed technical information, customer reviews and detailed product and price comparison tools, surpasses in many respects the in-store environment for product researching and purchasing. AO has an in-house video production facility with animation capabilities that produces video reviews of appliances that customers can access on AO.com. AO uses the video reviews to provide detailed general and technical advice regarding the products the Group offers to customers. AO believes that its video reviews bring the products it offers "to life" for customers, provide a level of quality and consistency which is not present in a traditional in-store retail setting and give customers access to detailed product information and commentary on a wide variety of appliances.

 

AO's online platform also features "Top 5" product recommendations across all product categories. AO chooses the products it features as "Top 5" products based on customer value for money, consistent volume availability, core technologies/key features, vendor promotions and customer reviews.

 

AO prides itself on delivering excellent customer service and has achieved high customer satisfaction levels. Prior to its rebranding as AO.com in August 2013, when asked, "On a scale of 0-10 (with 10 being most likely), how likely is it that you would recommend Appliances Online to a friend or colleague?", 85 per cent. of the 2,146 Appliances Online customers surveyed for the OC&C Report in April 2013 responded "9" or "10" and 93 per cent. said they were likely to purchase their next major domestic appliance from Appliances Online. Customers surveyed for the OC&C Report rated Appliances Online highly in terms of low prices, products in stock, wide range of products, delivery options/service and product information. As at the date of this document, AO has a rating of 4.9 out of 5 on Google Shopping and over 1.4 million Facebook followers.

 

AO believes that the strength of its customer offering will encourage existing customers to make additional purchases. AO also believes that, because customer feedback is generally widely available online, AO's high customer satisfaction levels will enable AO to continue to attract new customers.

 

Specialist in-house delivery and logistics services enabling an integrated end-to-end retail experience with structural advantages over competitors

 

A key consideration for many purchasers of major domestic appliances is delivery of the product, including delivery fees, options, speed and reliability. The Group's specialist in-house delivery and logistics service enables the Group to offer flexible and reliable delivery, seven days a week, to nearly all mainland UK postcodes. The Group's customers can choose from a range of delivery options, including free standard delivery and, for approximately 80 per cent. of SKUs and a majority of UK postcodes, same-day delivery for orders placed before noon and next-day delivery to a majority of UK postcodes for orders placed before midnight. AO also offers a choice of morning, lunch, afternoon or evening delivery times. Customers are also able to track their orders on the Group's websites. In addition, the Group offers a full suite of services to its AO website and third-party branded website customers, including delivery, installation, removal and recycling services for major domestic appliances.

 

Unlike many of its competitors that rely on third-party delivery and logistics services, the Group benefits from control over its entire distribution chain and therefore the customer experience from the online purchase of an appliance through to its delivery, enabling it to improve the services it offers to customers while controlling and reducing delivery costs. For example, AO's end-to-end retail experience enables it to offer Sunday delivery at no additional cost to the customer. The Group has also maintained high deliver to promise rates (96.3 per cent. and 98.2 per cent. for the year ended 31 March 2013 and the nine months ended 31 December 2013, respectively), as well as very low levels of product damage (0.12 per cent. of products damaged on delivery for the 40 weeks ending 3 January 2014) as part of its commitment to providing excellent customer service and to operational efficiency.

 

AO believes that the standard of service provided by the Group's in-house delivery service is crucial, particularly given that delivery teams are typically the only face-to-face interaction that customers have with the Group.

 

Strong track record of revenue growth, profitability and cash generation

 

The Group's revenue increased from £164.1 million for the year ended 31 March 2011 to £275.5 million for the year ended 31 March 2013, a compound annual growth rate of 29.6 per cent. The Group's revenue increased from £197.0 million for the nine months ended 31 December 2012 to £281.1 million for the nine months ended 31 December 2013, an increase of 42.7 per cent.

 

The Group's profit for the year attributable to equity shareholders increased from £2.6 million for the year ended 31 March 2011 to £6.8 million for the year ended 31 March 2013, a compound annual growth rate of 60.4 per cent. The Group's profit for the period attributable to equity shareholders was £5.0 million for the nine months ended 31 December 2012 and £3.2 million for the nine months ended 31 December 2013.

 

The Group's EBITDA increased from £4.4 million for the year ended 31 March 2011 to £10.7 million for the year ended 31 March 2013, a compound annual growth rate of 57.0 per cent. The Group's EBITDA was £7.9 million and £6.7 million for the nine months ended 31 December 2012 and 2013, respectively. The Group's EBITDA margin (calculated as EBITDA divided by revenue) was 3.9 per cent. and 2.4 per cent. for the year ended 31 March 2013 and the nine months ended 31 December 2013, respectively.

 

AO believes that the Group's track record of revenue growth, profitability and cash generation provides the Group with a strong foundation to pursue its future strategy and to further grow its business.

 

Experienced and entrepreneurial management team and strong culture with high employee engagement levels and dedication to delivering high quality customer service

 

The Group benefits from an experienced and entrepreneurial management team that has successfully developed and expanded the Group's business during periods of challenging market conditions and with a limited capital base, which AO believes demonstrates the ability of the management team to guide the Group as it continues to pursue its strategy of organic growth through customer focus, technical innovation and growing brand awareness. John Roberts, the Company's Chief Executive Officer, co-founded the Company in 2000 and Steve Caunce, the Company's Chief Financial Officer and Chief Operating Officer, joined in 2005. They work closely with a team of six senior managers who oversee the delivery and logistics, information technology, finance, marketing, operations and purchasing functions. The Executive Directors and senior management collectively have over 150 years of experience in the retail industry.

 

AO believes that happy employees are more engaged and require less management. In 2013, DRL Limited, a subsidiary of the Company, was ranked fourth in the Sunday Times "100 Best Companies" list of the best UK mid-sized companies to work for, rising from fifth in 2012. In connection with the Sunday Times' Employee Engagement Survey 2013, 97 per cent. of DRL Limited's employees participating in the survey agreed with the statement, "I am excited about where this organisation is going", and 94 per cent. agreed with the statement, "This organisation is run on strong values/principles". AO believes the Group has a strong culture and that its culture has helped the Group to attract high quality personnel, to maintain a high retention rate of key staff and to create a work force that is dedicated to delivering high quality customer service. AO seeks to empower its customer-facing staff with tools to resolve customer service issues in a timely and effective manner with few layers of supervision, which AO believes leads to an improved customer experience at a lower cost.

 

AO Strategic Objectives

 

Build on market-leading customer proposition and increase AO.com's share of UK online market for major domestic appliances

 

AO intends to continue to make improvements in the functionality and content of the Group's websites to facilitate product research and enhance the customer experience, to maintain and expand its product range and to continue to offer value for money to customers through competitive pricing and its "price match promise". For example, AO intends to increase the number of in-house video reviews of appliances on its websites to provide customers with detailed product information and commentary on a wider range of appliances. AO also intends to continue to invest in enhancing its customer service and its delivery, installation, removal and recycling services to better serve its customers. For example, AO recently expanded the range of services offered to AO.com customers in certain UK postcodes to include premium installation services, such as gas appliance installation services and installation services for certain appliances which require hardwiring or other more complicated installations. In addition, the planned recruitment of additional employees within AO's in-house IT team is expected to facilitate the continued development and improvement of the software and systems that the Group uses for order management and delivery.

 

AO believes that increasing smartphone and tablet traffic to AO.com represents a significant opportunity for the Group, as smartphones and tablets currently have lower conversion rates in comparison to desktop and laptop computers. The Group had total sessions from smartphones and tablets of 0.2 million and 0.5 million in September 2012 and 2013, respectively. In order to position the Group to take advantage of increases in smartphone and tablet traffic to AO.com, AO intends to further refine AO.com for access via smartphones and tablets. AO believes that smartphone and tablet session-to-order conversion rates should improve following such refinements to AO.com and as UK consumers generally become more experienced and comfortable with mobile commerce.

 

AO recently hired additional staff to focus on opportunities to tailor the Group's services and websites to provide customers with an individualised experience. For example, AO uses information about a customer's past purchases to provide intelligent self-service options when a customer calls the Group's customer service call centre. Over time, AO aims to develop additional internal systems and capacities that will help the Group to offer customers an improved, individualised experience. The Group aims to increase traffic to AO.com from email, which accounted for 3.5 per cent. of total sessions in the year ended 31 March 2013, by introducing targeted emails that highlight products and offers that may be of particular relevance to a given individual based on that individual's past purchases or past interaction with the Group's websites. Moreover, AO believes that in some cases it may be able to harness information regarding its past experience with a different customer to improve the experience of another customer. For example, if a delivery has failed to a particular postcode due to an access issue, the Group may be able to use that information to ask appropriate questions of another customer located in the same area to reduce the chance of an unsuccessful delivery. AO expects that such actions will improve the experiences of individual customers, which AO believes will help the Group to attract new customers and to encourage existing customers to make additional purchases.

 

AO believes that continuing to build on its market-leading customer proposition should enable the Group to increase AO.com's share of, and to benefit from further growth in, the UK online market for major domestic appliances.

 

Increase brand awareness

 

AO aims to increase brand awareness among UK consumers of the Group's own branded websites, in particular AO.com. AO's success to date has been achieved despite its low brand awareness among UK consumers. Prior to its rebranding as AO.com in August 2013, only 2 per cent. of UK consumers surveyed for the OC&C Report in March 2013 spontaneously identified Appliances Online in response to the question, "At the very beginning of the purchase process, which retailers came to mind when thinking of purchasing your large domestic appliance?".

 

AO is expanding its targeted marketing activities, including Facebook community activity and SEO to increase brand awareness and lower per unit customer acquisition costs. AO also seeks to increase brand awareness by attracting repeat customers and being accessible to new customers. AO plans to continue evolving its social media content to engage customers and promote brand awareness. AO commenced a national television advertising campaign in August 2013 and has budgeted £5.4 million in expenditure for the campaign for the year ended 31 March 2014. AO expects these actions to strengthen customer loyalty and brand profile. In December 2013, following its rebranding and the commencement of the national advertising campaign in August 2013, 6 per cent. of UK consumers in a survey commissioned by AO spontaneously identified AO.com or Appliances Online in response to the question, "Off the top of your head can you think of any companies that sell major kitchen appliances?".

 

Expand the range of products and services

 

AO intends to expand the range of products and services that it offers to customers. With regard to products, AO recently expanded the product range offered on AO.com to include certain small domestic appliances, including vacuums, floor cleaners, coffee machines, mixers and food processors. The OC&C Report projects that the UK overall market for small domestic appliances will grow from approximately £1.6 billion in 2013 to approximately £1.8 billion in 2016, a compound annual growth rate of 3 per cent. AO is also evaluating the possibility of selling other large appliances, such as televisions. The UK overall market for televisions in 2012 comprised sales of approximately 11.5 million units with a total sales value (including VAT) of approximately £4.3 billion, according to the OC&C Report. AO believes that the characteristics of the UK market for televisions (and, in particular, large televisions) would complement the Group's strengths, including providing two-person delivery and installation services, and that the Group could expand its product range to include televisions with limited additional investment.

 

With regard to services, AO recently expanded the range of services AO.com offers to AO.com customers by adding, for approximately 80 per cent. of SKUs, same-day delivery options to a majority of UK postcodes for orders placed before noon and by introducing for certain UK postcodes premium installation services, such as gas appliance installation services and installation services for certain appliances which require hardwiring or other more complicated installations. In the appropriate circumstances, AO may also offer installation services for a broader range of products.

 

AO believes that additional products and services represent significant growth opportunities for the Group and that its infrastructure and brand are able to support such growth opportunities.

 

Explore European expansion opportunities

 

AO may explore expansion opportunities in new markets in Europe. AO intends to evaluate expansion opportunities based on a number of criteria, including but not limited to, market demand and size, supply chain structure, internet penetration, competition, logistic feasibility, cost efficiencies and expected margins.

 

AO is initially reviewing expansion opportunities in Germany and is considering establishing a presence there. The overall market for major domestic appliances in Germany in 2012 amounted to total sales value (including VAT) of approximately £6.6 billion, with online sales comprising approximately 13 per cent. by value according to the OC&C Report. AO believes that the German market for major domestic appliances exhibits similar characteristics to the UK market of approximately five years ago and that the Group could potentially utilise its experience and supplier relationships in the UK major domestic appliances market in connection with any expansion into Germany.

 

In the longer term, AO may consider expansion opportunities in other markets in Europe, focusing initially on markets adjacent to Germany.

 

Financial Highlights

 

The following table sets out the Group's revenue, operating profit/loss, EBITDA and adjusted EBITDA for the years ended 31 March 2011, 2012 and 2013 and the nine months ended 31 December 2012 and 2013:

 


 

Year ended

31 March

 

Nine months ended

31 December


2011

2012

2013

2012

2013


£ million

£ million

£ million

£ million

£ million

Revenue

164.1

209.4

275.5

197.0

281.1

Operating profit/(loss)

3.8

(1.6)

8.9

6.7

4.7

EBITDA3

4.4

(0.4)

10.7

7.9

6.7

Adjusted EBITDA4

4.4

2.35

10.7

7.9

8.16

 

3 EBITDA means earnings before interest, taxes, depreciation and amortisation and is calculated by the Group by adding depreciation and amortisation

to operating profit/(loss), in each case to be determined in accordance with IFRS. EBITDA is an unaudited supplementary measure of the Group's

performance that is not required by, or presented in accordance with, IFRS or UK GAAP.

4 Adjusted EBITDA is an unaudited supplementary measure of the Group's performance that is not required by, or presented in accordance with, IFRS

or UK GAAP. The Group calculates Adjusted EBITDA by adding certain items to EBITDA, as discussed below.

5 For the year ended 31 March 2012, the Group had exceptional costs totalling £2.8 million, including £1.4 million included in cost of sales and £1.3

million included in administrative expenses, relating to specifically identifiable costs of the relocation of the Group's delivery and logistics services from Radcliffe to the national distribution centre in Crewe, the opening of a customer service call centre in Manchester and the restructuring of the Group's delivery fleet, including the write off of onerous property and vehicle leases, the write off of fixed assets no longer required, redundancy costs and dual running costs.

6 For the nine months ended 31 December 2013, the Group recorded professional fees in relation to initial public offering of £1.4 million, which related

to specifically identifiable costs incurred during the period relating to the Group's proposed initial public offering.

 

AO Board of Directors

 

AO has assembled an experienced Board of Directors that has extensive, complementary experience in the retail sector and on-line. The composition of the Board at Admission will be as follows:

 

·      Non-Executive Chairman: Richard Rose. Appointed in 2008.

·      Chief Executive Officer: John Roberts. Co-founded Company in 2000.

·      Chief Financial Officer and Chief Operating Officer: Steve Caunce. Appointed in 2005.

·      Non-Executive Director: Charles (Bill) Holroyd. Appointed in 20057.

·      Non-Executive Director: Christopher Hopkinson. Appointed in 2005.

·      Independent Non-Executive Director: Marisa Cassoni. Appointed in 2014.

·      Independent Non-Executive Director: Rudolf Lamprecht. Appointed in 2014.

·      Senior Independent Non-Executive Director: Brian McBride. Appointed in 2014.

 

7 Joined the Group as a Non-Executive Director of DRL Limited, a subsidiary of the Company, in September 2003.

 

Board Biographies

 

Richard Rose, (57), Non-Executive Chairman

 

Richard Rose was appointed to the Group as Non-Executive Chairman of the Company in 2008. He has been Non-Executive Chairman of Booker Group plc since 2006, Crawshaw plc since 2007 and Anpario plc since 2005. Prior to this, he held a number of positions in organisations such as AC Electrical Wholesale, where he was Chairman from 2003 to 2006, and Whittard of Chelsea plc, where he was Chief Executive Officer and then Executive Chairman from 2004 to 2006.

 

John Roberts, (40), Chief Executive Officer

 

John Roberts co-founded the Group in 2000. Having previously worked extensively in the kitchen appliance industry, he has been instrumental in using the internet as a platform to change the way in which kitchen appliances are sold in the United Kingdom. Since co-founding the Group, Mr Roberts has presided over the evolution of the business and led the management team which has successfully developed and expanded the Group's business during periods of challenging market conditions and with a limited capital base. He is from Bolton and is a passionate supporter of staff participation in local charitable causes.

 

Steve Caunce, (45), Chief Financial Officer & Chief Operating Officer

 

Steve Caunce joined the Group in 2005. Previously he was Finance Director with Phones 4U Limited between 2001 and 2003 and has held senior positions at Mytravel Plc and Preston North End Plc. Mr Caunce holds a degree in Mathematics and is an associate of the Institute of Chartered Accountants of England and Wales.

 

Charles (Bill) Holroyd CBE DL, (61), Non-Executive Director

 

Charles (Bill) Holroyd was appointed as a Non-Executive Director of the Company in 2005, having joined the Group as a Non-Executive Director of DRL Limited, a subsidiary of the Company, in 2003. He was formerly the Chief Executive Officer of Holroyd Meek Ltd, which was sold to Booker Group plc in 1995. Mr Holroyd was also an investor in and Chairman of Millies Cookies, which was sold to Compass Group plc in 2003, and Positive Solutions Ltd, of which Aegon plc acquired a 60 per cent. shareholding in 2002 and the remaining 40 per cent. shareholding in 2005. He is currently an investor in and Non-Executive of Warrington Sports Holdings Ltd and Chairman of and investor in TD4 Ltd. In addition Mr Holroyd is Chairman of OnSide Youth Zones and a Trustee of Save the Family.

 

Christopher Hopkinson, (54), Non-Executive Director

 

Christopher Hopkinson has been a Non-Executive Director since 2005. Following university he joined the Royal Air Force as a pilot officer and worked as an analyst for Cazenove. Mr Hopkinson subsequently joined Mark II, a UK distributor of kitchen and bathroom products, in 1986. He holds a degree in Economics & Computer Science and a master's degree in Logistics.

 

Marisa Cassoni, (62), Independent Non-Executive Director

 

Marisa Cassoni was appointed to the board as an independent Non-Executive Director of the Company in 2014. She is a chartered accountant with 40 years of experience and was previously Finance Director of the UK Division of Prudential Group. Between 2001 and 2006 she was Finance Director of the Post Office (subsequently Royal Mail) and between 2006 and 2012, she was Finance Director of the John Lewis Partnership plc and its subsidiaries. Ms Cassoni was a Non-Executive Director of Partnership plc and has been a Non-Executive Director of GFI Group Inc since 2005 and a Non-Executive Director of Skipton Group since 2012. Ms Cassoni holds a degree in Physics from Imperial College London and is an associate of the Institute of Chartered Accountants of England and Wales.

 

Rudolf Lamprecht, (65), Independent Non-Executive Director

 

Rudolf Lamprecht was appointed to the board as an independent Non-Executive Director of the Company in 2014. In 2009, Mr Lamprecht founded East-West-Connect GmbH & Co.KG and occupies the roles of both President and Chief Executive Officer. He is also currently a Non-Executive Director of Duagon AG and Fujitsu Technology Solutions (Holding) B.V. and was previously a Non-Executive Director of BSH Bosch und Siemens Hausgeräte GmbH & Co. KG, Osram Licht AG and Safe ID Solutions AG.

 

Mr Lamprecht worked for Hewlett Packard in various positions in Europe and the United States for approximately 20 years. In 1998, he joined Siemens AG as President of the Information and Communication Products Group and in 2000 he became a member of the Managing Board of Siemens AG, before joining its Corporate Executive Committee in 2004. During 2008 and 2009, Mr Lamprecht was Executive Advisor to the CEO of Siemens AG. He was a Director of Nokia Siemens Networks from 2007 until 2010. Mr Lamprecht holds a degree in Computer Science and has studied at Massachusetts Institute of Technology, the European Institute for Business Administration and Stanford University.

 

 

Brian McBride, (58), Senior Independent Non-Executive Director

 

Brian McBride was appointed to the board as an independent Non-Executive Director of the Company in 2014. In 2012, Mr McBride was appointed Chairman of ASOS plc, and he is also a Senior Adviser with Scottish Equity Partners, Senior Non-Executive Director at Computacenter plc, Non-Executive Director on the Board of the BBC, a member of the Advisory Board of Huawei UK, the UK subsidiary of the Chinese global communications provider, a member of the Advisory Board of Numis plc, a member of the UK Government's Digital Advisory Board and a member of the Court (Governing Body) of the University of Glasgow. He has previous experience as a Non-Executive Director at Celtic Football Club plc and SThree plc. Mr McBride holds a master's degree in economics, history and politics.

 

Forward looking statements

 

This announcement may contain forward-looking statements regarding the financial condition, results of operations, cash flows, dividends, financing plans, business strategies, operating efficiencies, budgets, capital and other expenditures, competitive positions, growth opportunities, plans and objectives of management and other matters relating to the Group. Statements in this announcement that are not statements of historical facts are hereby identified as "forward-looking statements". In some instances, these forward-looking looking statements can be identified by the use of forward-looking terminology, including the terms "projects", "forecasts", "anticipates", "expects", "believes", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. Examples of forward-looking statements include, but are not limited to: (i) statements about the benefits of any contemplated offering of securities, including future financial and operating results; (ii) statements of strategic objectives, business prospects, future financial condition, budgets, projected costs and projected levels of revenues and profits of the Group; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements.

 

By their nature, forward-looking statements involve risk and uncertainty, because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance, and the actual results, performance or achievements of the Group, and the development of the markets and the industries in which it operates or is likely to operate may differ materially from those described in, or suggested by, the forward-looking statements contained in this announcement. In addition, even if the operations, results of operations and financial position of the Group and the development of the markets and the industries in which the Group operates or is likely to operate are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. A number of factors could cause results and developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, changes in regulation and currency fluctuations.

 

Forward-looking statements may, and often do, differ materially from actual results. Any forward-looking statements in this announcement reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions. Any forward-looking statement speaks only as of the date on which it is made. New factors will emerge in the future, and it is not possible for the Company to predict or assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those described in any forward-looking statements.

 

Saves as required by law, or by the Listing Rules, the Prospectus Rules or the Disclosure Rules and Transparency Rules of the Financial Conduct Authority ("FCA"), AO and each of Jefferies, J.P. Morgan Cazenove, N M Rothschild & Sons Limited ("Rothschild") and Numis (together the "Banks") and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement whether as a result of new information, future developments or otherwise.

 

Important notice

 

The contents of this announcement, which have been prepared and issued by, and are the sole responsibility of the Company, have been approved solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act ("FSMA") 2000 by Jefferies and J.P. Morgan Cazenove.

 

Neither this announcement nor any copy of, as amended, it may be taken or transmitted, directly or indirectly, into the United States, Australia, Canada, Japan or South Africa or to any persons in any of those jurisdictions or any other jurisdictions where to do so would constitute a violation of the relevant securities laws of such jurisdiction.

 

This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any shares or other securities to any person in the United States or any other jurisdiction nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, or act as an inducement to enter into any contract or commitment whatsoever. The Offer and the distribution of this announcement and other information in connection with the listing and Offer in certain jurisdictions may be restricted by law and persons into whose possession this announcement, or any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

 

The Shares have not been and will not be registered under the Securities Act of 1933, as amended (the "Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold, resold, pledged, delivered, distributed or transferred directly or indirectly, into or within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable laws of any state or other jurisdiction of the United States. There will be no public offering of securities in the United States or elsewhere.

 

The Shares have not been and will not be registered under the applicable securities laws of Australia, Canada, Japan or South Africa and, subject to certain exceptions, may not be offered or sold, directly or indirectly, in Australia, Canada, Japan or South Africa. There will be no public offering of securities in Australia, Canada, Japan or South Africa or elsewhere.

 

This announcement is only addressed to, and directed at, persons in member states of the European Economic Area who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive ("Qualified Investors"). For the purposes of this provision, the expression "Prospectus Directive" means Directive 2003/71/EC, as amended, and includes any relevant implementing measure in each member state of the European Economic Area which has implemented the Prospectus Directive. Any investment or investment activity to which this announcement relates is available only to and will only be engaged in with such persons. 

 

Any purchase or subscription of Shares in the proposed Offer should be made solely on the basis of the information contained in the Prospectus to be issued by AO in connection with the Offer. No reliance may or should be placed by any person for any purpose whatsoever on the information contained in this announcement or on its completeness, accuracy or fairness. The information in this announcement is subject to change and does not purport to be full or complete. Neither AO nor the Banks undertake to provide the recipient of this announcement with any additional information, or to update this announcement or to correct any inaccuracies, and the distribution of this announcement shall not be deemed to be any form of commitment on the part of AO to proceed with the Offer or any transaction or arrangement referred to herein. This announcement has not been approved by any competent regulatory authority.

 

Jefferies and Numis, each of which is authorised and regulated by the FCA in the United Kingdom, and J.P. Morgan Cazenove and Rothschild, each of which is authorised by the Prudential Regulation Authority ("PRA") and regulated by the FCA and PRA in the United Kingdom, are acting exclusively for AO and no one else in connection with the Offer and will not regard any other person as their respective client in relation to the Offer and will not be responsible to anyone other than AOfor providing the protections afforded to their respective clients or for giving advice in relation to the Offer or the contents of this announcement or any transaction, arrangement or other matter referred to herein.

 

In connection with the Offer, each of the Banks or any of their respective affiliates, acting as investors for their own accounts, may subscribe for or purchase Shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such Shares and other securities of AO or related investments in connection with the Offer or otherwise. Accordingly, references in the Prospectus, once published, to the Shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, the Banks or any of their respective affiliates acting as investors for their own accounts. The Banks or any of their respective affiliates do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

 

Apart from the responsibilities and liabilities, if any, which may be imposed on Jefferies, J.P. Morgan Cazenove, Numis and Rothschild by the FSMA or the regulatory regime established thereunder, none of Jefferies, J.P. Morgan Cazenove, Numis nor Rothschild accepts any responsibility whatsoever, and makes no representation or warranty, express or implied, in relation to the contents of this announcement, including its accuracy, completeness or for any other statement made or purported to be made by it or on behalf of it, the Company, the Directors, the selling shareholders or any other person, in connection with the Company, the Shares, the selling shareholders or the Offer, and nothing in this announcement shall be relied upon as a promise or representation in this respect, whether as to the past or the future. Each of Jefferies, J.P. Morgan Cazenove, Numis and Rothschild accordingly disclaims all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of this announcement or any such statement.

 

The date of Admission may be influenced by factors such as market conditions. There is no guarantee that the Offer and Admission will occur and you not should base your financial decisions on the Company's intentions in relation to the Offer and Admission at this stage. Acquiring investments to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested. The value of shares can decrease as well as increase. This announcement does not constitute a recommendation concerning the Offer. Persons considering investment in such investments should consult an authorised person specialising in advising on such investments.

 

In connection with the Offer, a stabilising manager, or any of its agents, may (but will be under no obligation to), to the extent permitted by applicable law, over-allot Shares or effect other transactions with a view to supporting the market price of the Shares at a higher level than that which might otherwise prevail in the open market. The stabilising manager may, for stabilisation purposes, over-allot Shares up to a maximum of 15% of the total number of Shares comprised in the Offer. The stabilising manager will not be required to enter into such transactions and such transactions may be effected on any stock, market, over-the-counter market, stock exchange or otherwise and may be undertaken at any time during the period commencing on the date of the commencement of conditional dealings of the Shares on the London Stock Exchange and ending no later than 30 calendar days thereafter. However, there will be no obligation on the stabilising manager or any of its agents to effect stabilising transactions and there is no assurance that stabilising transactions will be undertaken. Such stabilising measures, if commenced, may be discontinued at any time without prior notice. In no event will measures be taken to stabilise the market price of the Shares above the offer price. Save as required by law or regulation, neither the stabilising manager nor any of its agents intends to disclose the extent of any over-allotments made and/or stabilisation transactions conducted in relation to the Offer.

 

Certain figures in this announcement, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this announcement may not conform exactly with the total figure given.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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