REG - AO World plc - FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2025
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RNS Number : 2731N AO World plc 18 June 2025
18 June 2025
AO WORLD PLC
FINAL RESULTS FOR THE YEAR ENDED 31 MARCH 2025
RECORD £45M LFL ADJUSTED PBT, AHEAD OF ORIGINAL GUIDANCE
12% SALES GROWTH IN CORE B2C RETAIL BUSINESS
AO World plc ("AO" or "the Group"), the UK's most trusted electrical retailer,
today announces its audited financial results for the financial year ended 31
March 2025 ("FY25").
Our core B2C Retail business saw strong growth in the year, in line with our
expectation of delivering double-digit growth. As planned, adjusted profits on
a like-for-like (LFL(1)) basis grew faster than revenues at 32% despite
macroeconomic headwinds, with LFL adjusted profit before tax above the top end
of our previously upgraded range of £39 to £44m.
AO Group on LFL basis £(m) FY25 FY24 % Mvmt
B2C Retail revenue(2) 832 743 12%
LFL Group revenue 1,108 1,039 7%
LFL adjusted profit before tax 45 34 32%
LFL adjusted profit before tax as a % of LFL Group revenue 4.1% 3.3% 0.8ppt
AO Group inc. musicMagpie £(m) FY25 FY24 % Mvmt
Group revenue 1,138 1,039 9%
Adjusted Profit before tax(3) 44 34 27%
Statutory Profit before tax 21 34 (40%)
Basic earnings per share (p) 1.70 4.29 (60%)
Adjusted basic earnings per share (p)(4) 5.70 4.29 33%
Free cashflow (5) 23 21 9%
Net funds(8) 23 34 (32%)
Financial highlights
* LFL Group revenue grew 7%, to £1.108bn with core B2C Retail revenue up 12% to
£832m. Growth was driven by the expansion of our Five Star membership
offering as well as the broadening of our product range to c9,000 products.
musicMagpie contributed an additional £30m revenue to the Group for the
period.
* As planned, LFL adjusted profit before tax grew faster than revenue - up 32%
to £45m -with LFL adjusted PBT margin of 4.1%, making good progress towards
our medium-term target of 5%.
* Free cashflow of £23m (2024: £21m) driven by strong operating performance
and efficient working capital management. The Group ended the year with net
funds of £23m after the c.£35m cash costs relating to the musicMagpie
acquisition and the funding of the EBT to purchase shares to satisfy share
schemes.
* The Revolving Credit Facility was increased and extended with the total
facility increasing from £80m to £120m which remains undrawn and now
expiring in October 2028.
Operational highlights
* Successful acquisition of musicMagpie, enabling further vertical integration
and enhancement of our customer offering in the electricals market.
* Five Star membership momentum continues to be strong with growth in membership
numbers, renewal rates and share of wallet.
* Implementing our third-party warehousing solution for small products in the
year has improved the unit economics enabling the profitable expansion of our
range and therefore giving customers, particularly Five Star members, even
more reasons to buy from us.
* Repeat customers accounted for over 60% of orders and are cheaper to acquire,
give us better share of wallet and buy across more categories. We expect this
trend to continue to improve over time as the proposition and awareness of it
across categories grows.
* Over 650,000 new customers(6) chose to buy from us for the first time during
the year, which is fuel for our flywheel in the future.
* Cemented our position as the UK's most trusted electrical retailer in the year
- increasing our Trustpilot(6) score to a globally leading 4.9/5 on over
750,000 reviews.
* Extension to December 2033 of our arrangement with Domestic and General in
relation to the sale and promotion of the "AO Care" product protection plans.
* Extension of NewDay arrangement to August 2033, with a rebase of commercial
terms and a roadmap for future growth.
* Our culture is thriving, with happy, committed and engaged employees
delivering exceptional customer service. AO was named as a top 200 UK best
employer following a survey carried out by the Financial Times and Statista.
* Performance in the Mobile business has been materially behind our expectations
and a drag on profits as the post-pay connection market has declined further,
and customer preference has shifted towards disaggregation of mobile
contracts. We continue to review our strategy in this area and will not
continue to fund material losses going forward.
* Recycled or refurbished our eight millionth appliance at our AO Recycling
facility. Further capex investment in the facility included the addition of
an extruder to the plastics plant which increases our capability to refine
plastic output and is critical to our ambition of creating new fridges from
old fridges.
Outlook
As we look to FY26 we have a number of initiatives in the pipeline which we
expect to give customers more opportunities to buy from us, and more reasons
to keep coming back to us. Despite the wider macroeconomic challenges,
particularly employment cost increases, our objectives remain unchanged and we
are confident in our ability to continue to grow revenue, alongside Group
adjusted PBT of £40m to £50m.
Looking to the medium term, we reiterate our ambition of delivering a PBT
margin of over 5%. And in the longer term, we are confident in our ability to
take advantage of the c. £28bn total addressable market that we have in front
of us.
AO's Founder and Chief Executive, John Roberts, said:
"Our 25th year in business has been our best yet. We've delivered a record(10)
profit before tax performance, significantly grown our sales, and continued to
delight our ever-growing customer base with trusted, outstanding service.
"One of the key drivers of this performance is our Five Star membership
programme, which is giving our customers even more reasons to keep coming back
to us. We're also broadening our product range beyond the Major Domestic
Appliance category that we're best known for. We added over 1,500 new products
during the year, which means that categories such as fitness, drones, cameras
and health and beauty are all now available at fantastic prices through AO.
"And the really great news is that there's so much more for us to go after,
with a total addressable market of over £28bn. Given the size of that prize,
the fantastic momentum that we're seeing across the business, and our awesome
team of AOers, I couldn't be more excited about the next 25 years. In many
ways, we're only just getting started."
Enquiries
AO World PLC Tel: +44(0)1204 672 400
John Roberts, Founder & CEO ir@ao.com (mailto:ir@ao.com)
Mark Higgins, CFO & COO
Sodali Tel: +44(0) 20 7250 1446
Rob Greening AO@sodali.com
Russ Lynch
Maria Sizyakova
Results presentation
An in-person results presentation will be held for analysts and investors at
AO's London Office at 09.00am (BST) today, followed immediately by a live
Q&A session. Advanced registration prior to arrival is required via
AO@sodali.com.
A playback of the presentation will be available on AO World's investor
website at www.ao-world.com (http://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. We also serve the B2B
market in the UK, providing electricals and installation services at scale. AO
also ensures customers' electronic waste is dealt with responsibly through its
WEEE processing facility alongside tech refurbishment via musicMagpie.
(1)Like-for-like basis relates to the continuing operations of the Group
excluding the post-acquisition revenue and profit before tax of musicMagpie.
(2) B2C (business-to-consumer) Retail revenue relates to products and services
purchased by B2C customers through the retail websites (including membership
fees and revenue attributable to protection plans sold with the products).
(3)Adjusted profit before tax is defined as statutory profit before tax
adjusted for the fees related to the musicMagpie acquisition and the
impairment charge relating to the Mobile cash generating unit.
(4)Adjusted basic earnings per share is defined as basic earnings per share
adjusted for the impact of the fees relating to the acquisition of musicMagpie
and the impairment charge relating to the Mobile CGU.
(5) Free cashflow is defined as the movement in cash and cash equivalents in
the year of (£12.7m) excluding the cost of funding the EBT to acquire shares
in the company of £11.1m, the net cost of acquiring musicMagpie of £5.7m and
the repayment of its debt of £19.1m.
(6)A customer is defined as an individual customer who has purchased via
ao.com.
(7)Trustpilot scores sourced from their website, June 2025.
(8) Total electricals market data from GfK, for the 12 months to 31 March
2025. AO's value is from company data, net value.
(9)Net funds is defined as cash and cash equivalents less borrowings less
owned asset lease liabilities but excluding right of use asset lease
liabilities.
(10)Record is defined as record LFL adjusted PBT.
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.
STRATEGIC REVIEW
Revenues in our core B2C Retail business have grown by c12% YoY, with total
Group revenues (on a LFL basis) increasing by c7% YoY to £1.1bn. LFL
adjusted PBT was £45.2m, with profits growing faster than sales, at 32% YoY.
Our balance sheet is robust and at the period end we had net funds(8)
of £23m following the acquisition of musicMagpie and the repayment of its
debt (£25m) as well as the funding our Employee Benefit Trust to purchase AO
shares (£11m) in the market to satisfy employee awards. The Group increased
and extended its Revolving Credit Facility in the period on more favourable
terms from £80m to £120m, which remains undrawn and now expiring in
October 2028.
This strong performance was delivered despite continuing challenges for our
Mobile business which is operating in a declining market and continues to see
significant competition. These challenges have led to the impairment in the
goodwill and intangible assets associated with the Mobile business of £19.6m
at year end. Nonetheless, mobile as a category is strategically important to
the Group both through a consumer and supplier lens and we intend to offer
both a SIM only and credit backed SIM free products on ao.com in the future.
We will review our post pay connection business as we do not have appetite for
continued losses on this area.
As anticipated, there has been an impact to operational costs, particularly in
our logistics operation, from inflationary pressures both in the year and as
the benefit of multi-year contracts roll off. The largest increase in both
quantum and percentage terms has been employment costs. This will only
further increase in FY26 because of government policy changes to minimum wage
and employers NI. We anticipate that this is likely to continue for the next
few years, and so we will increasingly look to mitigate these costs through
automation, outsourcing and offshoring.
During the year we acquired musicMagpie, one of the UK's leading recommerce
operators. With highly complementary business models, this acquisition will
enable AO to enhance our consumer tech proposition. It offers a differentiated
service to our customers, and will unlock value through our reverse supply
chain while simultaneously advancing our sustainability objectives.
Critically, we have continued to perform exceptionally well for customers over
the year. Our Trustpilot score has increased to 4.9 and we now have over
750,000 reviews, cementing our position as the UK's most trusted electrical
retailer. Our AO Five Star membership continues to grow strongly and we are
increasing our frequency and share of wallet with customers, having
re-engineered our model for cost effective warehousing and distribution of
smaller items and newer categories.
Our culture and people are fundamental to our success, and it is pleasing to
see another year of high engagement, with an average Employee Index Score
("EIS") for the year of 81. Our people are happy, committed, and have a
sense of belonging - which is a key element of our ability to provide
exceptional service to our customers. We are operating with a growth mindset,
and working together cohesively and collaboratively across the Group to drive
stakeholder value.
OPERATIONAL AND FINANCIAL REVIEW
Operational highlights
B2C Retail
Our B2C Retail business is one of the UK's market leaders in MDA retailing. We
serve customers directly through our website, ao.com, as well as through
various marketplaces. Established over 20 years ago, we offer a comprehensive
range of MDA products, smaller domestic appliances, computing, AV, mobile
phones, consumer electronics, gaming and smart home products.
Ao.com, is the cornerstone of our retail operations and we pride ourselves on
our exceptional customer service, extensive product range and competitive
pricing. We are committed to enhancing the customer experience through
improved product information, diverse payment options, flexible delivery and
installation options, and recycling services. By continuously monitoring the
market, we maintain our price promise to customers.
This year, over 650,000 new shoppers chose to buy from us bringing the total
historical customer base on ao.com to over 12.5 million. We continue to report
market-leading customer satisfaction scores with a Trustpilot rating of 4.9/5,
on over 750,000 reviews, which undoubtedly supports a customer repeat rate of
over 60% during the year. It also reflects our unwavering commitment to
outstanding service, which we firmly believe is the most economical way to
serve customers - that is, getting it right first time.
Our share of the total MDA market(8) increased in the year by 1.1% to 16%,
meaning that we have plenty of headroom to grow further in this core category.
We continue to expand our product range in all categories, particularly those
outside MDA, and now sell over 9,000 different SKU's; an increase of around
1,500 in the year.
Maintaining and improving brand awareness is key to driving new customers, and
ensuring repeat customers keep returning. We continue to invest in advertising
and marketing spend, with an increase in the year on direct acquisition costs
with immediate transaction links, as well as continued brand investment across
sponsorships, postal mail brochures and other media.
Our Care product protection offering performed resiliently as customers
continue to recognise the value and peace of mind that our plans offer. We
have extended our arrangement with Domestic and General in relation to the
sale and promotion of our Care product protection plans to December 2033.
Shortly before the end of the period we extended our arrangement for a further
seven years with New Day, who provide our Customer Finance. The extension
allows for a number of new innovative finance products that we look forward to
being released in the coming year.
Mobile
Mobile is the largest category in the electrical sector by value, and a
strategically important product for AO to make available to its customers -
given it is the product they change the most frequently and have the most
emotional attachment to. However, our Mobile business has faced a challenging
year, and the new contract mobile phone market decline of c13% has been driven
by depressed customer demand, a lack of handset innovation and a move towards
disaggregated contracts. The shrinking market has forced up acquisition costs
through affiliate channels and reduced margins as competitors fight for share
which has ultimately led to an impairment in the goodwill and intangibles of
the Mobile business of £19.6m. We have focused on delivering a competitive
and compelling proposition for our customers, but this has resulted in losses
in the year.
We have made strategic progress, notably securing an exclusive licence from
Lebara to operate a mobile handset webshop under the Lebara brand, leveraging
their customer base. In addition, we entered into an agreement with Samsung
where we provide a facility for customers buying handsets from Samsung, to be
coupled with an airtime contract from certain mobile network operators.
As we enter the new financial year we are evaluating the non-core mobile
websites with a view to finding a path to profitability, or closing those
sites. We are looking to find sustainable solutions with the mobile network
operators ("MNO") on whose behalf we connect customers to ensure that both
parties make a sensible economic return. We will also enhance the offering on
our main ao.com website and expect to launch a mobile virtual network operator
("MVNO") proposition and improved customer finance offerings that will
leverage our brand and position our proposition in a way that resonates with
customer demand.
musicMagpie
We were delighted to welcome the musicMagpie team to the AO family in December
2024. The acquisition will augment our capability and value capture in the
consumer technology categories as well as further driving our ESG credentials.
We expect that in time this will improve the affordability of many products on
ao.com for customers, helping to further differentiate the AO proposition.
Logistics
Our market-leading in-house logistics infrastructure enables the nationwide
delivery of millions of products annually, seven days a week, serving both
AO's retail business and third-party clients. Our delivery network operates
from our central hub in Crewe and encompasses warehouses and distribution
centres with a total of over 1.4 million sq ft of space, supplemented by a
network of 16 delivery depots across the UK.
With our continued focus on profit and cash generation, our logistics division
continued to look to drive costs down and enhance efficiencies within our
delivery and warehousing operations throughout the year. Our operations are
adaptable to the retail business's demands for driver resources and can
leverage our operational gearing through third-party logistics. Our expertise
in complex two-person delivery, which is highly valued in our industry, allows
us to achieve incremental profitability without detracting from our core
business.
It is critically important that our people and our delivery partners are happy
and feel valued in the work they do, given how central they are to delivering
exceptional service to our customers. During the year we reviewed the
structure of driver payments which has resulted in increased tenure with a
consequential link to customer satisfaction.
As part of the Group's wider roadmap for technology development, during the
year we commenced the process of replacing our warehouse management systems
which are expected to go live in FY26. We continue to invest in our fleet with
a focus on driving capacity per vehicle as well as moving our trunking fleet
to compressed natural gas fuel, with the target of having the vast majority
transitioned by 2030.
We also outsourced the warehousing of smaller products to a third-party early
in FY25. This change has improved unit economics and enabled us to expand the
range of products available to customers giving them even more reasons to buy
from us.
Recycling
Our recycling plant in Telford is one of the most sophisticated fridge
recycling facilities in Europe and adheres to the highest UK and European
standards. This ensures the safe and efficient capture of environmentally
harmful gases and oils. We specialise in recycling refrigeration products,
including large American style fridges, but also process all old fridges and
other white goods. Our highly skilled repairs team refurbishes appliances that
still have a useful life, which are then sold with a warranty through our
established base of trade customers.
We recycled or reused over 1.2m products in the year, bringing the total
number of products recycled or reused to over 8.5 million. We continue to
promote recycling by making it easy and accessible to all our customers.
We invested in our plastics refining facility during the year with the
addition of an extruder which processes the plastics flakes into pellet form -
a more commoditised and valuable product. This has helped us develop our
circular economy strategy with clients such as Volution Group and
Ultra-Polymers and we were pleased to have been awarded BEAMA's Net Zero
Collaboration Award for our work with Vent-Axia (a Volution Group brand),
creating ventilation products from our recycled fridge plastics. Our
medium-term strategic objective continues to be "Closing the Loop"
partnerships with key manufacturers to supply recycled products to make
electrical appliances and in doing so maximising value recovery.
We continue to collect third-party volumes using our own logistics network,
providing efficient service from council amenity sites, while reducing the
number of miles driven.
We continue to monitor potential legislative changes, including Extended
Producer Responsibility and the possibility that retailers will have to take
back old waste products for free when they deliver new ones. Although this
will add complexity to our operation and comes at a cost, with our vertically
integrated logistics and recycling businesses we would be best placed amongst
our competition to deal with such a requirement should it arise and indeed it
could provide further downstream opportunities.
Technology
During the year we continued to deliver against our multi-year technology
strategy, with strong progress across digital, data, and core systems
transformation. Our focus remained on enhancing customer experience,
increasing operational efficiency, and building a scalable, resilient
technology foundation for future growth.
We commenced Phase 2 of our ERP transformation programme, aiming at delivering
significant process simplification and improved data visibility across supply
chain & warehouse management. Our application modernisation agenda
advanced further, including implementation of a new Contact Centre platform
that will improve customer support experience and operational insight.
We also made progress in our data and analytics strategy-expanding our use of
machine learning and advanced analytics to inform business decisions and
enable more personalised customer interactions.
In parallel, we continued to invest in cyber security and resilience -
focussing on technology, people and process - maintaining a strong security
posture in an evolving threat landscape.
Looking forward we will complete the second phase of our ERP transformation
programme in FY26. We will continue evolving our digital and data
platforms-deepening the integration of AI/ML capabilities into core business
processes and expanding the use of real-time data to improve responsiveness
and performance. As part of our modernisation strategy, we will focus on
rationalising legacy systems, accelerating cloud adoption, and continuing to
shift undifferentiated workloads to enterprise-grade platforms.
Customer experience will remain a key priority. We will further enhance our
personalisation capabilities, with new tools and data models aimed at
delivering more relevant and engaging customer journeys across channels.
Finally, we will build on our progress in technology governance, architecture,
and delivery capability ensuring we can scale sustainably, innovate
responsibly, and support the evolving needs of the business.
Financial performance
The 2025 Financial Year saw a continued focus on growing revenue whilst
generating profit and cash. The financial year covered a period of depressed
consumer confidence because of the ongoing cost-of-living crisis as well as
geopolitical events giving rise to uncertainty and volatility. Despite this
backdrop, we maintained our strategy of delivering profitable, cash generative
growth, through the following key steps:
1. Improving gross margin
We continued to improve our gross margin by optimising product margins and
outsourcing the warehousing of small products to a third party. This transfer
facilitated improved unit economics which has allowed us to increase the range
of small products we offer to customers.
2. Optimisation of processes
A culture of continual improvement has delivered efficiency wins across our
key operations including Logistics and Recycling. The vertically integrated
nature of our business enables us to benefit from small changes in business
units, generating financial gains to the P&L quickly, as well as
capability wins for the business as we look to deliver profitable revenue
growth.
3. Ongoing overhead control
We maintain our disciplined approach to overhead cost control. We are
investing in making operational efficiencies to deal with inflationary
pressures across all areas of overheads, specifically in our headcount cost.
4. Conversion of profit to cash
Converting profit to cash is a key component of our ability to deliver further
growth. It has enabled us to invest in assets to drive the long-term
profitability of the business. The current year has seen us continue to invest
in our plastic processing plant at our recycling business and acquire
musicMagpie to further strengthen our vertically integrated model.
We increased and extended our Revolving Credit Facility in October 2024 with
the total facility increasing to £120m with the facility now due to expire in
October 2028.
Our priorities for the current financial year remain to leverage our cost base
and strengthen our balance sheet for profitable growth. AO remains a market
leader in MDA in the UK with a 16% share of the total market, which provides
us with a strong and resilient base from which to grow. Our strategy is to
invest prudently in the business, seize the significant market opportunities
that we see in front of us, and leverage our growing and loyal customer base.
The following commentary, unless otherwise stated, covers our UK business only
and includes musicMagpie from the point of acquisition on 12(th) December
2024.
Revenue
1. Revenue 31 March 31 March %
Year ended 2025 2024 (represented see note 2) Change
£m
B2C Retail revenue 831.9 743.5 11.9%
B2B Retail revenue 116.9 130.5 (10.5%)
Mobile revenue 94.4 106.3 (11.2%)
Re-commerce revenue 42.6 10.6 297.6%
Third-party logistics revenue 30.5 27.6 10.8%
Recycling revenue 21.3 20.8 2.6%
1,137.5 1,039.3 9.5%
For the 12 months ended 31 March 2025, total Group revenue (including
musicMagpie) increased by 9.5% to £1,137.5m (2024: £1,039.3m). LFL revenue
increased YoY by 7% to £1.108bn.
B2C Retail Revenue
Revenue in our core B2C Retail business has increased 12% YoY in the in line
with our plan to achieve double-digit revenue growth. This increase has been
driven by growth in product, service and delivery and product protection plan
revenue. Product, service and delivery revenue is generated from ao.com,
marketplaces and third-party websites.
This performance comes as a result of our increased drive to grow not only our
MDA market share but also in other electrical appliances. Our MDA revenue
increased YoY by c8%, with our total MDA market share increasing c1% to 16%8.
There was an increase in service revenue, which includes membership income,
fees for delivery, recycling, installation and related services mainly driven
by the increase in product revenue.
B2B Retail Revenue
Revenue has decreased 10.5% YoY in B2B as expected, in line with the groups
focus on optimising for profitability.
Mobile revenue
Mobile revenue, generated from commissions paid by the phone networks per
connection, decreased as a result of a decline in the total new contract
market, and as we optimise our margin and acquisition cost structure.
Re-commerce revenue
Recommerce revenue is generated from product sales through Elekdirect and
musicMagpie as well as reworked recycled products through AO Recycling.
Revenue grew YoY by £32.0m mainly as a result of the acquisition of
musicMagpie on 12(th) December 2024.
Third-party logistics revenue
Third-party logistics increased YoY by 10.8%, generating total revenue of
£30.5m. Our expertise in complex two-person delivery is highly valued in our
industry, and we undertake a number of deliveries and other services on behalf
of third-party clients in the UK including Hisense and Simba. This revenue
delivers incremental profitability. The business will continue to maximise
this revenue opportunity to leverage our operational gearing, without it
distracting from the core business.
Recycling revenue
Recycling revenues increased 2.6% over the year, which again was a pleasing
performance when taking into account the wider trading environment. Increased
MDA sales and uptake of our recycling service by customers increased processed
volumes year on year along with the introduction of the palletisation of
plastic. This increase in volumes was offset by a decrease in output prices
for recycled materials due to market forces.
Gross Margin
2. Gross Margin 31 March 31 March %
Year ended 2025 2024 Change
£m
Gross profit 276.0 243.3 13.5%
Gross margin 24.3% 23.4% + 0.9 ppts
Gross profit, including product margins, services and delivery costs,
increased by 13.5% to £276.0m (2024: £243.3m), against a sales increase of
9.5%. Gross margin increased by 0.9ppts to 24.3%. This increase reflects the
significant steps taken by the business to offset inflationary increases in
operational costs through operational efficiencies, pricing actions and
optimising margin.
Selling, General and Administrative Expenses ("SG&A")
3. Selling, General & Administrative Expenses ("SG&A") 31 March 31 March %
Year ended 2025 2024 Change
£m
Advertising and marketing 44.4 40.5 9.7%
% of revenue 3.9% 3.9%
Warehousing 62.0 52.2 18.8%
% of revenue 5.4% 5.0%
Other admin 125.7 115.0 9.3%
% of revenue 11.0% 11.1%
Administrative expenses before adjusting items 232.1 207.7 11.7%
% of revenue 20.4% 20.0%
Adjusting items 22.9 - 100%
% of revenue 2.0% -
Total Administrative expenses 255.0 207.7 22.9%
% of revenue 22.4% 20.0%
SG&A costs excluding the adjusting items (see Alternative Performance
measures for further detail) increased to £232.1m (2024: £207.7m). Costs
increased as a percentage of sales as a result of increased warehouse costs.
Advertising and marketing costs increased to £44.4m (2024: £40.5m) but
remained flat as a percentage of revenue at 3.9%. We have seen a small
increase in acquisition spend as a percentage of total revenue and have chosen
to invest in direct marketing channels and move away from TV spend.
Warehousing costs, which include the costs of running our central warehouses
for both our customers and for our third-party customers, the outbase
infrastructure and our recycling operation increased to £62.0m (2024:
£52.2m). The impact of inflation saw an increase in general property costs
including rates; increased operational labour costs as well as an increase in
rent for one of our central warehouses. Operational efficiencies including
outsourcing the warehousing of SDA products and leasing warehouse space to
third parties acted to partly offset the inflationary costs.
Other admin costs have marginally decreased as a percentage of revenue, with
total pound spend in the year of £125.7m (2024: £115.0m). Inflationary
pressures, mainly driven by wage inflation offset by our continued drive to
right size the business and drive efficiencies.
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.
Adjusted profit before tax
Adjusted profit before tax is calculated by adding back or deducting Adjusting
Items to Profit Before Tax. Adjusting Items are those items which the Group
excludes in order to present a further measure of the 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.
Adjusting items of £22.9m for the year ended 31 March 2025 are as follows:
· On 12th December 2024, the Group acquired the whole of the issued and
to be issued share capital of musicMagpie plc. Costs, relating to advisor
fees, incurred during the period in relation to this transaction total £3.3m;
and
· The continued challenging trading conditions in the mobile market
triggered an impairment review of the Mobile Cash Generating Unit ("CGU")
resulting in an impairment charge of £14.7m recognised to reduce the goodwill
in relation to this CGU down to nil and a further impairment of £4.8m against
the carrying value of intangible fixed assets.
Due to their size and one off nature, these costs have been treated as
adjusting items and are added back in arriving at Adjusted profit before tax.
There were no Adjusting Items in the prior year.
LFL adjusted profit before tax
To give a meaningful comparison against prior years and in line with guidance
previously given to the market we have stated a LFL adjusted PBT. This is
Adjusted PBT adding back the pre-tax losses of musicMagpie of £1.7m for the
period from acquisition to 31 March 2025 to enable comparison on a LFL basis
The reconciliation of statutory Profit Before Tax to Adjusted PBT and LFL
adjusted PBT is set out in table 4.
4. Adjusted profit before tax and LFL adjusted profit before tax 31 March 2025 31 March 2024 % Change
Year ended
£m
Profit before tax 20.6 34.3 (40%)
Adjusting Items 22.9 - 100%
Adjusted profit before tax 43.5 34.3 27%
Adjusted profit before tax as % of Revenue 3.8% 3.3%
musicMagpie losses 1.7 -
LFL adjusted profit before tax 45.2 34.3 32%
LFL adjusted profit before tax as % of Revenue 4.1% 3.3%
Taxation
The tax charge for the year was £10.9m (2024: £9.6m) resulting in an
effective rate of tax for the year of 53.0%. The effective rate of tax is
higher than the UK corporation tax rate for the period of 25% predominantly
due to the impact of the non-deductible adjusting items (see above) in
particular the goodwill impairment of £14.7m and the acquisition costs of
£3.3m. Excluding these adjusting items, the effective rate of tax for the
year would have been 28.3%.
Pillar Two legislation has been enacted in the UK to introduce the
multinational top-up tax and domestic top-up tax to accounting periods
beginning on or after 31 December 2023. The Group have performed an assessment
of this legislation and do not expect a potential exposure to Pillar Two
income taxes.
Our tax strategy can be found at ao-world.com/
responsibility/group-tax-strategy.
Retained profit for the year and earnings per share
The Group's retained profit for the year was £10.5m (2024: £24.7m).
Earnings per share were as follows:
12 months ended 31 March 2025 31 March 2024
£m
Profit
Profit attributable to Owners of the Parent Company from Continuing operations 9.7 24.7
Profit attributable to Owners of the Parent Company from Discontinued 0.8 -
operations
Earnings attributable to owners of the parent company 10.5 24.7
Adjusting items (see table 4) 22.9 -
Adjusted earnings attributable to owners of the parent company 33.4 24.7
Number of shares
Weighted average shares in issue for the purposes of basic earnings per share 571,918,807 577,184,050
Potentially dilutive shares 21,413,462 21,058,825
Diluted weighted average number of shares 593,332,269 598,242,875
Earnings per share from continuing operations (pence per share)
Basic earnings per share 1.70 4.29
Diluted earnings per share 1.63 4.14
Adjusted basic earnings per share 5.70 4.29
Earnings per share from continuing and discontinued operations (pence per
share)
Basic earnings per share 1.83 4.29
Diluted earnings per share 1.76 4.14
Adjusted basic earnings per share 5.84 4.29
Adjusted basic earnings per share is calculated by adding back the Adjusting
items - see table 4 above
Cash resources and cashflow
At 31 March 2025, the Group's available liquidity, being Cash and cash
equivalents plus amounts undrawn on its revolving credit facility, was
£147.3m (2024: £116.4m). On 8 October 2024, the Group increased and extended
its Revolving Credit Facility with the total facility increasing from £80m to
£120m which now expires in October 2028. The total amount utilised at 31
March 2025 on the existing facility was £0.1m and represents letters of
credit (2024: £3.7m of guarantees and letters of credit).
During the year, the Group had a cash outflow of £12.7m (2024: £21.0m
inflow) as set out in the table below:
As at 31 March 2025 31 March 2024
£m
UK Germany Total UK Germany Total
Cashflow from operating activities 56.8 1.2 58.0 62.1 (0.5) 61.6
Cashflow from investing activities (13.5) - (13.5) (7.6) - (7.6)
Cashflow from financing activities (57.1) (0.1) (57.2) (32.9) (0.1) (33.0)
Cash movement in the year (13.8) 1.1 (12.7) 21.6 (0.6) 21.0
Cashflow from UK operating activities £56.8m (2024: £62.1m)
Despite the improvement in the operating performance in the year as detailed
above, operating cashflows reduced largely due to an increase in tax payments
(£9.3m v £1.2m) as a consequence of the majority of tax losses being
utilised in the prior year. Working capital continued to be well controlled
with key movements set out in the table below.
The Group's movement in working capital outflow is set out in the table below:
As at 31 March 2025 31 March 2024
£m
UK Germany Total UK Germany Total
Inventories 88.5 - 88.5 79.5 - 79.5
Trade and other receivables 191.0 - 191.0 205.1 - 205.1
Trade and other payables (212.9) - (212.9) (228.0) (0.1) (228.1)
Net working capital 66.6 - 66.6 56.6 (0.1) 56.5
Inventories increased by £9m in the year principally as a result of the
acquisition of musicMagpie (£5m) and within our Retail business where we
continue to improve availability as well as broadening the range of products,
particularly in new categories. Inventory days were 47 days at 31 March 2025
(31 March 2024: 43 days).
Trade and other receivables reduced by £14m to £191m. This was driven in the
main by the impact of lower connection volumes in our Mobile business with
cash received from past connections outweighing new income recognised.
Trade and other payables reduced by £15m to £213m. This again was impacted
by Mobile with reduced connections impacting the purchases in the last quarter
in addition to a reduction in upfront payments received from the networks. In
the rest of the Group, the phasing of purchases in Q4 of each year in Retail
impacted the year end position and the acquisition of musicMagpie added c£6m
of payables to the current year. Creditor days at 31 March 2025 were 52 (31
March 2024: 55) reflecting continued support from our supplier base.
Cashflow from UK investing activities £13.5m outflow (2024: £7.6m outflow)
Cash capital expenditure in the year of £8.8m principally related to the
continued refresh of delivery vehicles in Logistics and further investment in
our Recycling activities. In addition, in December 2024, the Group acquired
the whole of the issued share capital of musicMagpie for net cash
consideration of £5.7m.
Cashflow from UK financing activities £57.1m outflow (2024: £32.9m outflow)
The cash outflow principally related to lease repayments of £21.2m (2024:
£18.4m), the purchase in the market, by the Company's EBT of shares in the
Company totalling £11.1m (2024: £nil) including transaction fees, repayment
of borrowings acquired with musicMagpie of £19.1m and net interest paid of
£5.7m (2024: £6.9m). The prior year also included the repayment of
borrowings on the Group's revolving credit facility of £10.0m.
Net funds and total net debt
As a result of the above movements, Net funds and Total net debt were as
follows:
As at 31 March 31 March
£m 2025 2024
£m £m
Cash and cash equivalents at year end 27.4 40.1
Borrowings - Repayable within one year (0.2) (0.2)
Borrowings - Repayable after one year (1.7) (1.9)
Owned asset lease liabilities - Repayable within one year (0.7) (1.6)
Owned asset lease liabilities - Repayable after one year (1.4) (2.0)
Net funds excluding leases relating to right-of-use assets 23.4 34.4
Right of use asset lease liabilities - Repayable within one year (17.7) (15.4)
Right of use asset lease liabilities - Repayable after one year (41.5) (49.8)
Net debt (35.9) (30.8)
Borrowings of £1.9m (2023: £2.1m) relate to a mortgage used to partly fund
the acquisition of one of the Group's recycling sites.
Lease liabilities decreased by £7.4m to £61.4m (2024: £68.8m) principally
reflecting capital repayments of £21.2m offset partly by net new leases of
£10.4m (including the reassessment of lease terms) mainly relating to leased
premises in our Logistics business and £3.4m of property leases acquired with
musicMagpie.
CONDENSED CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2025
Note 2025 2024
£m £m
Revenue 2, 3 1,137.5 1,039.3
Cost of sales (861.5) (796.0)
Gross profit 276.0 243.3
Administrative expenses- impairment of goodwill and 6 (19.6) -
intangible fixed assets
Other administrative expenses (235.4) (207.7)
Total administrative expenses (255.0) (207.7)
Other operating income 0.1 0.6
Operating profit 21.1 36.2
Finance income 4.8 4.5
Finance costs (5.3) (6.4)
Profit before tax 20.6 34.3
Tax charge 4 (10.9) (9.6)
Profit after tax for the period from continuing operations 9.7 24.7
Result for the period from discontinued operations 10 0.8 -
Profit after tax for the year 10.5 24.7
Total comprehensive profit attributable to owners of the parent arising from:
Continuing operations 9.7 24.7
Discontinued operations 0.8 -
10.5 24.7
Earnings per share from continuing operations (pence)
Basic earnings per share 5 1.70 4.29
Diluted earnings per share 5 1.63 4.14
Earnings per share from continuing and discontinued operations (pence)
Basic earnings per share 5 1.83 4.29
Diluted earnings per share 5 1.76 4.14
The Group has no items of other comprehensive income for the period ended 31
March 2025 or the prior period. As a result, the total comprehensive income
for the period is the same as the profit for the period and therefore no
separate Statement of Comprehensive Income has been presented.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 25
Note 2025 2024
£m £m
Non-current assets
Goodwill 6 25.6 28.2
Other intangible assets 13.2 9.6
Property, plant and equipment 27.1 20.1
Right of use assets 51.6 56.2
Trade and other receivables 7 88.5 90.0
Deferred tax 2.2 2.9
208.2 207.1
Current assets
Inventories 88.5 79.5
Trade and other receivables 7 102.5 115.1
Cash and cash equivalents 27.4 40.1
218.4 234.7
Total assets 426.6 441.8
Current liabilities
Trade and other payables 8 (207.7) (225.6)
Borrowings 9 (0.2) (0.2)
Lease liabilities 9 (18.5) (16.9)
Corporation tax payable (0.7) (0.6)
Provisions (0.5) (0.6)
(227.6) (243.9)
Net current liabilities (9.2) (9.1)
Non-current liabilities
Trade and other payables 8 (5.2) (2.5)
Borrowings 9 (1.7) (1.9)
Lease liabilities 9 (42.9) (51.9)
Provisions (4.7) (3.9)
(54.5) (60.1)
Total liabilities (282.1) (304.0)
Net assets 144.5 137.8
Equity attributable to owners of the parent
Share capital 11 1.5 1.4
Share premium account 11 108.5 108.5
Investment in own shares 11 (10.9) -
Other reserves 68.2 64.4
Retained losses (22.8) (36.5)
Total equity 144.5 137.8
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 31 March 2025
Other reserves
Share Share Investment Merger Capital Share-based Translation Other Retained Total
capital premium in own reserve redemption payments reserve reserve losses £m
£m account shares £m reserve reserve £m £m £m
£m £m £m £m
Balance at 31 March 2023 1.4 108.2 - 59.2 0.5 15.5 (9.4) (6.3) (63.3) 105.7
Profit for the period - - - - - - - - 24.7 24.7
Share-based payment charge (net of tax) - - - - - 7.1 - - - 7.1
Issue of shares - 0.3 - - - - - - - 0.3
Movement between reserves - - - - - (2.2) - - 2.2 -
Balance at 31 March 2024 1.4 108.5 - 59.2 0.5 20.4 (9.4) (6.3) (36.5) 137.8
Profit for the period - - - - - - - - 10.5 10.5
Share-based payment charge (net of tax) - - - - - 7.1 - - - 7.1
Issue of shares 0.1 - - - - - - - - 0.1
Purchase of shares by EBT - - (11.1) - - - - - - (11.1)
Share options exercised - - 0.2 - - - - - - 0.2
Movement between reserves - - - - - (3.2) - - 3.2 -
Balance at 31 March 2025 1.5 108.5 (10.9) 59.2 0.5 24.3 (9.4) (6.3) (22.8) 144.5
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2025
Note 2025 2024
£m £m
Cash flows from operating activities
Profit for the year in continuing operations 9.7 24.7
Net cash generated from/ (used in) operating activities in discontinued 1.2 (0.5)
operations
Adjustments for:
Depreciation and amortisation 27.1 24.3
Non cash impairments of goodwill and intangible fixed assets 6 19.6 -
Profit on disposal of property, plant and equipment (0.1) (0.1)
Finance income (4.8) (4.5)
Finance costs 5.3 6.4
Taxation charge 10.9 9.6
Share-based payment charge 7.3 6.7
Increase/ (Decrease) in provisions 0.4 (0.6)
Operating cash flows before movement in working capital 76.6 66.0
Increase in inventories (4.2) (6.4)
Decrease in trade and other receivables 18.3 28.8
Decrease in trade and other payables (23.5) (25.6)
Total movement in working capital (9.4) (3.2)
Taxation paid (9.3) (1.2)
Cash generated from operating activities 58.0 61.6
Cash flows from investing activities
Interest received 1.0 0.7
Proceeds from sale of property, plant and equipment 0.1 -
Acquisition costs relating to right of use assets - (0.1)
Acquisition of property, plant and equipment (8.8) (5.8)
Acquisition of intangible assets (0.1) (2.4)
Acquisition of subsidiary (net of cash acquired) 12 (5.7) -
Cash used in investing activities (13.5) (7.6)
Cash flows from financing activities
Proceeds from issue of ordinary share capital 0.1 0.3
Purchase of shares by EBT including transaction costs 11 (11.1) -
Proceeds from new borrowings - 2.2
Repayment of borrowings (19.4) (10.1)
Interest paid on borrowings (2.3) (3.1)
Interest paid on lease liabilities (3.4) (3.8)
Repayment of lease liabilities (21.2) (18.4)
Net cash used in financing activities by discontinued operations (0.1) (0.1)
Net cash used in financing activities (57.2) (33.0)
Net (decrease)/ increase in cash (12.7) 21.0
Cash and cash equivalents at beginning of year 40.1 19.1
Cash and cash equivalents at end of year 27.4 40.1
NOTES TO THE FINANCIAL INFORMATION
1. Basis of preparation
This financial information has been prepared and approved by the Directors in
accordance with UK adopted International Accounting Standards ("UK adopted
IFRS").
Whilst the financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards (IFRSs), this announcement does
not itself contain sufficient information to comply with IFRSs.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 March 2025 or 2024 but is derived
from those accounts. Statutory accounts for 2024 have been delivered to the
Registrar of Companies and those for 2025 will be delivered following the
Company's Annual General Meeting. The auditor has reported on those accounts;
the report was unqualified, did not draw attention to any matters by way of
emphasis and did not contain statements under section 498(2) or (3) Companies
Act 2006.
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 FY23, the German operations
are treated as a discontinued activity under IFRS5 and the results and
cashflows are therefore shown separately on the face of each of the primary
statements. Further details are included in note 10.
Adoption of new and revised standards
The accounting policies set out in Note 3 of the Group financial statements
have been applied in preparing this financial information.
New accounting standards in issue but not yet effective
New standards and interpretations that are in issue but not yet effective are
listed below:
· Amendments to IAS 21, Lack of exchangeability (effective date 1
January 2025).
· Amendments to IFRS 9 and IFRS 7, Classification and measurement of
financial instruments (effective date 1 January 2026)
· IFRS 18, Presentation and Disclosure in Financial Statements
(effective date 1 January 2027)
The Group continues to monitor the potential impact of new standards and
interpretations which may be endorsed and require adoption by the Group in
future reporting periods. The Group does not consider that any of the issued
standards, or standard amendments or interpretations issued by the IASB, but
not yet applicable, will have a significant impact on the financial statements
with the exception of IFRS 18 which will primarily affect the classification
and presentation of income and expense items.
Going concern
Notwithstanding net current liabilities of £9.2m as at 31 March 2025, 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 £120m revolving credit facility (which
was amended and extended in October 2024 to now expire in October 2028).
The Directors have prepared base and sensitised cash flow forecasts for the
Group for a period of 12 months from the expected approval of the financial
statements ("the going concern period") which indicate that the Group will
remain compliant with its covenants and will 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 take account of current trading, management's view on future
performance and their assessment of the impact of market uncertainty and
volatility.
In assessing the going concern basis, the Directors have taken into account a
severe but plausible downside to sensitise its base case by applying a sales
risk of 15%, which restricts revenue growth to levels below those achieved in
the year ended 31 March 2025. Further sensitivities have been modelled to
reduce gross margin by 1% and to assume greater than inflation staff costs for
non-head office staff.
Although not modelled in these severe but plausible downside scenarios, the
risks above could be offset with controllable mitigations across various
expense categories and discretionary spend. Under this severe but plausible
downside scenario the Group continues to demonstrate headroom on its banking
facilities and remains compliant with its quarterly covenants which are
interest cover (Adjusted EBITDA being at least 4x net finance costs) and
leverage (Net debt to be no more than 2.5x EBITDA). The likelihood of a breach
of covenants is considered remote and hence headroom against its covenants has
not been disclosed.
Consequently, the Directors are confident that the Group and Company will have
sufficient funds to continue to meet its liabilities as they fall due for at
least 12 months from the date of approval of the financial statements and
therefore have prepared the 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 that 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 impairment of intangibles and goodwill and revenue recognition in respect
of commission for product protection plans and network connections include
significant areas of accounting estimation.
With regard to revenue recognition in respect of commission for product
protection plans and network connections, 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.
Given the estimates used in valuing the intangible fixed assets acquired with
musicMagpie, management have also included this area as a key source
estimation uncertainty.
The information below sets out the estimates and judgements used in these
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 estimate of profit share relating to the scheme as a whole;
• the estimated rate of attrition based on historic data; 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 refined estimations in relation to the valuation of
plans which has resulted in £1.3m of previously recognised revenue being
reversed in the year ended 31 March 2025.
In line with the requirements of IFRS 15, the Group only recognises revenue to
the extent that it is highly probable that a significant reversal in the
amount of cumulative revenue will not occur when the uncertainty associated
with its variable consideration is subsequently resolved. This 'constraint'
results in potential revenue of £3.0m being restricted at 31 March 2025 (31
March 2024: £nil).
The commission receivable balance as at 31 March 2025 was £98.1m (2024:
£96.5m). The rate used to discount the revenue for the FY25 cohort is 5.15%
(2024: 5.85%). The weighted average of discount rates used in the years prior
to FY25 was 4.73% (2024: 4.34%).
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) 4.25% (2024: 4.49%);
• 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 restriction 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 estimations in relation to the valuation of
connections which has resulted in a £1.4m of previously constrained revenue
which has now been recognised in the year ended 31 March 2025.
In line with the requirements of IFRS 15, the Group only recognises revenue to
the extent that it is highly probable that a significant reversal in the
amount of cumulative revenue will not occur when the uncertainty associated
with its variable consideration is subsequently resolved. This 'constraint'
results in potential revenue of £3.2m being restricted at 31 March 2025 (31
March 2024: £3.2m).
Whilst there is estimation uncertainty in valuing the contract asset,
reasonably possible changes in assumptions are not expected to result in
material changes to the valuation of the asset in the next financial year.
The commission receivable balance as at 31 March 2025 was £46.7m (2024:
£63.1m).
Impairment of intangibles and goodwill
On the acquisition of Mobile Phones Direct Limited in 2018, the Group
recognised amounts totalling £16.3m in relation to the valuation of the
intangible assets and £14.7m in relation to residual goodwill.
Intangible assets are reviewed for impairment if events or changes in
circumstances indicate that the carrying amount may not be recoverable.
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 sell.
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 three-year strategic plan period and the
long-term growth rate to be applied beyond this three-year period.
The Group has considered if indicators of impairment exist with regard to a
number of factors, including the decline in the overall Mobile post pay
market, changes in inflation and interest rates and general uncertainty in the
wider macroeconomic environment.
Management concluded that the continuing challenging trading conditions in the
competitive UK mobile market including a 15%-20% year-on-year reduction in the
market for post pay contracts are indicators of impairment and consequently,
an impairment review was undertaken per IAS 36 using the value in use method.
As a result of the impairment review, a full impairment of the £14.7m
goodwill and a further £4.8m impairment to the carrying value of intangibles
has been recognised leaving a carrying value of £2.5m as at 31 March 2025.
Whilst the impairment was a significant estimate and judgement during the
year, having booked an impairment, the Directors no longer believe there is
any significant estimation uncertainty going forwards.
Valuation of intangible assets acquired in business combinations
The Group applies the acquisition method of accounting to account for business
combinations in accordance with IFRS 3, 'Business Combinations'.
In December 2024, the Group acquired musicMagpie for cash consideration of
£9.8m. In determining the fair value of intangible assets arising on business
combinations, management is required to estimate the timing and amount of
future cash flows applicable to the intangible assets being acquired and
select an appropriate valuation methodology.
The valuation of intangible assets therefore involves significant estimates
and assumptions which are inherently subjective and was therefore a key source
of estimation uncertainty at the acquisition date but management do not expect
there to be a significant risk of any further material changes in the next 12
months.
Having engaged an independent third-party valuation expert to assist in the
identification and fair valuation of the identifiable intangible assets
acquired, Management believes the assumptions applied and valuation method
used are reasonable as at 31 March 2025.
2. Revenue
During the period, management have considered whether the disaggregation of
revenue continues to appropriately reflect the ongoing nature of the Group's
business and how it is managed. Having taken account of the nature, amount,
timing and cashflows from the different parts of the business, management
believe that a disaggregation which splits revenue based on the nature of
revenue rather than the product is more appropriate and provides greater
clarity to the users of the financial statements. Consequently, prior year
reported numbers have been represented and this does not have an impact on
total revenue. Following the acquisition of musicMagpie, whose revenue is all
recommerce, management have disaggregated this revenue stream from the rest of
the business and has now been combined with the existing recommerce revenue in
the Group.
The table below shows the Group's revenue by major business area.
2025 2024
Major revenue streams £m £m
(represented)
B2C Retail revenue 831.9 743.5
B2B Retail revenue 116.9 130.5
Mobile revenue 94.4 106.3
Re-commerce revenue 42.6 10.6
Third-party logistics revenue 30.5 27.6
Recycling revenue 21.3 20.8
1,137.5 1,039.3
3. Segmental analysis
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.
The Group's Chief Operating Decision Maker reviews the Group's performance as
a whole and makes decisions for allocating resources based on the Group as a
whole, as such, there is only one operating segment in the Group.
4. Taxation
2025 2024
£m £m
Corporation tax
Current year 10.1 3.7
Adjustments in respect of prior years 0.2 0.1
10.3 3.8
Deferred tax
Current year 0.8 6.0
Adjustments in respect of prior years (0.2) (0.2)
0.6 5.8
Total tax charge 10.9 9.6
The expected corporation tax charge for the year is calculated at the UK
corporation tax rate of 25% (2024: 25%) on the profit before tax for the year.
The charge for the year can be reconciled to the profit in the statement of
comprehensive income as follows:
2025 2024
£m £m
Profit before tax on continuing operations 20.6 34.3
Tax at the UK corporation tax rate of 25% (2024: 25%) 5.1 8.6
Ineligible expenses 0.2 0.5
Income not taxable (0.1) (0.1)
Non-deductible goodwill impairment 3.7 -
Non-deductible acquisition costs 0.8 -
Share-based payments 1.1 0.6
R&D tax credit - 0.1
Prior period adjustments - (0.1)
Tax charge for the year 10.9 9.6
5. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
2025 2024
£m £m
Profit attributable to Owners of the Parent Company from 9.7 24.7
continuing operations
Profit attributable to Owners of the Parent Company from 0.8 -
discontinued operations
Earnings attributable to owners of the parent company 10.5 24.7
Adjusting items 22.9 -
Adjusted earnings attributable to owners of the parent company 33.4 24.7
Number of shares
Weighted average shares in issue for the purposes 571,918,807 577,184,050
of basic earnings per share
Potentially dilutive shares 21,413,462 21,058,825
Weighted average number of diluted ordinary shares 593,332,269 598,242,875
Earnings per share from continuing operations (pence per share)
Basic earnings per share 1.70 4.29
Diluted earnings per share 1.63 4.14
Adjusted basic earnings per share 5.70 4.29
Earnings per share from continuing and discontinued operations (pence per
share)
Basic earnings per share 1.83 4.29
Diluted earnings per share 1.76 4.14
Adjusted basic earnings per share 5.84 4.29
The basic earnings per share is affected by adjusting items that are one off
in nature as set out in note 3 of the Groups financial statements. Management
have therefore presented an adjusted earnings per share which is based on
adjusted earnings attributable to the owners of the parent company as they
believe it provides helpful additional information for stakeholders in
assessing the performance of the business.
6. Goodwill
£m
Cost 28.2
At 31 March 2023 and at 31 March 2024
Additions (see note 12) 12.1
At 31 March 2025 40.3
Impairment
At 31 March 2023 and at 31 March 2024 -
Impairment* 14.7
At 31 March 2025 14.7
Carrying amount
At 31 March 2025 25.6
At 31 March 2024 28.2
*The impairment charge relates to the impairment of goodwill of the Mobile
CGU- a further amount of £4.8m was impaired against the carrying value of
other intangible assets in the Mobile CGU which is discussed further below.
The carrying value of 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 musicMagpie by
AO Limited. The previous year balance also included goodwill from the
acquisition of Mobile Phones Direct Limited (now AO Mobile Limited) by AO
Limited which is discussed further below.
The addition in the year represents the residual goodwill on the acquisition
of musicMagpie by AO Limited (see note 12). In line with IAS36, goodwill is
allocated to CGUs or groups of CGUs that are expected to benefit from the
combination. Management have allocated £11.7m of the residual goodwill to the
UK CGU and £0.4m to the musicMagpie CGU, being the lowest levels within the
Group that this allocated goodwill is monitored for internal management
purposes.
Impairment of goodwill
UK CGU - £26.4m (2024: £13.5m)
At 31 March 2025, goodwill acquired through UK business combinations
(excluding Mobile Phones Direct Limited) was allocated to the UK (excluding
Mobile) cash-generating unit ("CGU"). There was an additional £12.9m
allocated to the UK CGU as a result of the acquisition of musicMagpie plc
during the year, with the balance of £0.4m being allocated to the musicMagpie
group of the CGUs. This represents the lowest level within the Group at which
the allocated goodwill is monitored for internal management purposes.
The Group performed its annual impairment test as at 31 March 2025. The
recoverable amount of the CGU has been determined based on the value in use
calculations. The Group prepares cash flow forecasts derived from the most
recent financial budget and financial plan for three years. The final year
cash flow is used to calculate a terminal value and is based on an estimated
growth rate of 1%. This rate does not exceed the average long term growth rate
for the market.
Management estimates discount rates using pre-tax rates that reflect current
market assessments of the time value of money and the risks specific to this
CGU. In arriving at the appropriate discount rate to use, we adjust the CGU's
post-tax weighted average cost of capital to reflect the impact of risks and
tax effects specific to the cash flows. The weighted average pre-tax discount
rate we used was approximately 13.4% (2024: 11.9%).
The key assumptions, which take account of historic trends, upon which
management has based their cash flow projections are sales growth rates,
selling prices and product margin. Management do not believe that any
reasonable possible sensitivity would result in any impairment to this
goodwill.
Mobile Phones Direct Limited - £nil (2024: £14.7m)
Goodwill arose on the acquisition of Mobile Phones Direct Limited ("MPD") in
2018. In addition, included in this CGU group are websites and domains of
affordablemobiles.co.uk and buymobiles.net which the Group acquired in the
previous year.
The 30 September 2024 interim financial statements outlined the minimal amount
of headroom against the Mobile CGU and that reasonably plausible changes in
assumptions could lead to a material impairment. During the second half of
FY25, trading conditions have remained challenging, with the market down c13%
year-on-year and therefore management deemed this to be a trigger for a full
impairment review at 31 March 2025.
Management have undertaken a reforecast of the business based on the current
exit run-rates for FY25 as well as a look forward for the period to FY29. Key
assumptions include:
· A continued decline in the new connections and upgrade market in
FY26;
· An annualization of new contracts which commenced in FY25;
· Revenue growth beyond FY26 of 3%; and
· Cost inflation and cost savings of between +3% and -2% beyond
FY26, based on expectations for inflation and managements estimate of product
price changes based on industry knowledge and reductions overheads
The resultant cashflow has been discounted using a pre-tax discount rate of
13% based on the capital structure of an equivalent business and reflecting
market risk and volatility due to current macro- economic uncertainty to
arrive at a value in use of £9.8m. This has been compared to the carrying
value which showed there was a significant deficit against the carrying value
in managements base case and as a result, an impairment charge of £14.7m has
been recognised reducing the goodwill balance for the Mobile CGU to £nil
(2024 carrying value: £14.7m).
As a result of the above, and to ensure the carrying amount of the remaining
intangibles is not below the Fair Value Less Costs of Disposal ("FVLCD"),
management have also determined the recoverable amount for the remaining
intangibles in the Mobile CGU by calculating the FVLCD. Management applied a
"relief from royalties" valuation to determine a recoverable amount with the
key assumptions being: forecast revenue (with no growth beyond FY26),
royalties of 1% and a pre-tax discount rate of 13% resulting in a recoverable
amount of £2.5m for the remaining intangibles (the measurement is categorised
within Level 3 of the fair value hierarchy, as it involves significant
unobservable inputs) and therefore, an impairment of £4.8m against the
carrying value of intangibles of the Mobile CGU has been recognised.
7. Trade and other receivables
2025 2024
£m £m
Trade receivables 15.1 17.7
Contract assets 144.8 159.6
Prepayments and accrued income 31.0 27.9
Other receivables 0.2 -
191.0 205.1
The trade and other receivables are classified as:
2025 2024
£m £m
Non-current assets 88.5 90.0
Current assets 102.5 115.1
191.0 205.1
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:
2025 2024
£m £m
Balance brought forward 159.6 174.4
Revenue recognised 115.4 120.8
Cash received (134.1) (139.6)
Revisions to estimates 0.1 0.2
Unwind of discounting 3.8 3.8
Balance carried forward 144.8 159.6
Revisions to estimates represents changes to previously recognised or
constrained revenue from periods prior to the current year.
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. It also receives a share of
the overall profitability of the scheme. 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
reflecting the time value of money;
• 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 6 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 17 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 16 years from c.3.7m plans that have
been sold. Of these, c.1.12m 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 a possible indicative sensitivity of the carrying value of the
commission receivable and revenue to a reasonably possible change in inputs to
the discounted cash flow model over the next 12 months. However, there are
other reasonably possible alternative outcomes that could result in the
contract asset increasing materially in the next 12 months.
Sensitivity Impact on contract asset and revenue
£m
Cancellations (increase) or decrease by 2% (1.9)/ 1.9
Cancellations
The number of cancellations and therefore the cancellation rate can fluctuate
based on a number of factors including macroeconomic changes such as
unemployment and cost of living. The impact of reasonable potential changes is
shown in the sensitivities above.
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 to reflect the time value
of money;
• 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 4, 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.
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.
Sensitivity Impact on contract
asset and revenue
£m
2% decrease/ (increase) in expected cancellations 1.0/ (1.0)
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 above.
8. Trade and other payables
2025 2024
£m £m
Trade payables 128.2 145.3
Accruals 24.6 20.9
Advanced payments on account 22.8 29.8
Deferred income 20.9 17.9
Other payables 16.3 14.2
212.9 228.1
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and ongoing costs. The average credit period taken for trade
purchases is 52 days (2024: 55 days). Advanced payments on account relate to
payments on account from Mobile Network Operators and our product protection
plan provider where there is no right of set off with the contract asset.
Trade and other payables are classified as:
2025 2024
£m £m
Current liabilities 207.7 225.6
Long-term liabilities 5.2 2.5
212.9 228.1
9. Net debt and movement in financial liabilities
2025 2024
£m £m
Cash and cash equivalents at year end 27.4 40.1
Borrowings - Repayable within one year (0.2) (0.2)
Borrowings - Repayable after one year (1.7) (1.9)
Owned asset lease liabilities - Repayable within one year (0.7) (1.6)
Owned asset lease liabilities - Repayable after one year (1.4) (2.0)
Net funds excluding leases relating to right of use assets 23.4 34.4
Right of use asset lease liabilities - Repayable within one year (17.7) (15.4)
Right of use asset lease liabilities - Repayable after one year (41.5) (49.8)
Net debt (35.9) (30.8)
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 are disclosed within the Property Plant and Equipment table
in note 18 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.
Movement in financial liabilities in the year was as follows:
Borrowings Lease
£m liabilities
£m
Balance at 1 April 2024 2.1 68.8
Changes from financing cash flows
Payment of interest (0.3) (3.4)
Repayment of lease liabilities - (21.2)
Repayment of borrowings (19.4) -
Total changes from financing cash flows (19.6) (24.6)
Other changes
Brought in on acquisition of subsidiary (see note 12) 19.1 3.4
New lease liabilities - 15.2
Reassessment of lease terms - (4.8)
Interest expense 0.3 3.4
Total other changes 19.4 17.3
Balance at 31 March 2025 1.9 61.4
New lease liabilities include existing leases that have been renewed or
extended beyond their original lease terms.
Reassessment of lease terms relate to leases the Group exited during the
period and those that will end before their original lease term.
Repayment of borrowings includes £19.1m relating to loans and accumulated
interest, acquired on the acquisition of musicMagpie (see note 12).
Borrowings Lease
£m liabilities
£m
Balance at 1 April 2023 10.0 85.3
Changes from financing cash flows
Payment of interest (0.9) (3.8)
Repayment of lease liabilities - (18.4)
Repayment of borrowings (10.1) -
New borrowings 2.2 -
Total changes from financing cash flows (8.8) (22.2)
Other changes
New lease liabilities - 3.8
Reassessment of lease terms - (1.9)
Interest expense 0.9 3.8
Total other changes 0.9 5.7
Balance at 31 March 2024 2.1 68.8
10. Discontinued Operations
Following the closure of the Groups German business in FY23, the business has
been treated and presented as a discontinued operation in the year ended 31
March 2025. The tables below show the results of the German operation for the
relevant reporting periods:
2025 2024
£m £m
Revenue 1.0 0.2
Cost of sales - -
Gross profit 1.0 0.2
Administrative expenses and other operating income 0.1 (0.2)
Operating profit 1.1 -
Finance income - -
Profit before tax 1.1 -
Taxation charge (0.3) -
Profit after tax of discontinued operations 0.8 -
Revenue in the current year represents a payment in full and final settlement
to AO Deutschland by Domestic and General ("D&G") in relation to any
commercial obligations or liabilities in respect of insurance backed warranty
plans previously sold in the territory.
Basic earnings per share from discontinued operations is 0.14p (2024: 0.00p).
Diluted earnings per share from discontinued operations is 0.13p (2024:
0.00p).
The table below summarises the cashflows of the German operation for the
relevant reporting periods:
2025 2024
£m £m
Net cash flows from operating activities 1.2 (0.5)
Net cash flows from investing activities - -
Net cash flows from financing activities (0.1) (0.1)
11. Share capital, investment in own shares and share premium
Number Share Share Investment in own shares
of shares capital premium £m
m £m £m
At 1 April 2024 578.6 1.4 108.5 -
Share issue 1.7 0.1 - -
Purchase of shares by EBT (including transaction costs) - - - (11.1)
Transfer of own shares upon exercise of share options - - - 0.2
At 31 March 2025 580.3 1.5 108.5 (10.9)
On 8 July 2024, the Company issued 1,733,027 shares to satisfy options granted
in July 2020 under the FY21 AO Incentive plan. The shares were acquired and
are held in the Company's Employee Benefit Trust ("EBT"), at nominal values,
and the EBT transfers to the participants as they are exercised.
On 1 and 2 August 2024, the Company's EBT also purchased 8,882,350 and 434,602
respectively, of the Company's ordinary shares at market value. Consideration
paid was £11.1m, which includes transaction costs of £0.2m. Shares held by
the EBT will be used to satisfy options under the Group's share schemes.
8,882,350 of the shares were purchased at market value (117.3p per share and
total consideration of £10.4m) from John Roberts, Sally Roberts and Chris
Hopkinson who are considered related parties. There were no outstanding
balances with these related parties as at 31 March 2025.
As at 31 March 2025, the number of shares held by the EBT was 11,161,642
(2024: 788,578).
12. Acquisition of subsidiaries
On 12 December 2024, the Group acquired all the ordinary shares in musicMagpie
for £9.8m, satisfied in cash. The net cash cost of the acquisition was
£5.7m, reflecting cash balances acquired of £4.1m.
musicMagpie operates in the re-commerce sector, specialising in the buying,
renting and selling of refurbished consumer technology and physical media
products. The company has established operations in the UK and the acquisition
enables the existing AO Group to enhance its consumer technology offering.
In the period from acquisition to 31 March 2025 the subsidiary contributed
revenue of £29.7m and a loss before tax of £1.7m to the consolidated result
for the year. If the acquisition had occurred on the first day of the
accounting period, Group revenue would have been £1,212.4m and profit before
tax would have been £16.4m, which excludes adjusting items incurred by
musicMagpie. In determining these amounts, management has assumed that the
fair value adjustments that arose on the date of acquisition would have been
the same if the acquisition occurred on the first day of accounting period.
The acquisition had the following effect on the Group's assets and
liabilities:
Fair value of assets/ liabilities acquired
£m
Intangible fixed assets 11.2
Tangible fixed assets 6.8
Deferred tax asset 1.1
Inventories 4.9
Trade and other receivables 1.5
Cash 4.1
Trade and other payables (11.8)
Borrowings (19.1)
Deferred tax liability (1.1)
(2.3)
Cash consideration 9.8
Residual goodwill 12.1
Goodwill has arisen on the acquisition primarily due to the expected
synergies, ability to integrate existing tech capabilities and the associated
future growth potential of the group in addition to intangible assets that
don't meet recognition criteria such as the assembled workforce of
musicMagpie.
Fair values determined on a provisional basis
Fair value adjustments have been determined on a provisional basis and, in
line with relevant accounting standards, will be finalised in the 12-month
hindsight period. The principal fair value adjustments related to intangible
fixed assets. An independent third-party valuation expert was engaged by
management to assist in the identification and fair valuation of the
identifiable intangible assets acquired - a "relief from royalty" method was
utilised to arrive at the valuation of the marketing assets of £7.2m using a
1% royalty rate and a replacement cost method utilised to arrive at the
valuation for the technology assets of £4.0m using management's best
estimate of the number of full time equivalents employees and hours it would
take to replace the technology assets.
Acquisition related costs
The Group incurred acquisition related costs of £3.3m related to adviser
fees. These costs have been included in administrative expenses in the Group's
consolidated statement of comprehensive income.
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