Ao.com reports pre-tax loss of £2.9m as Europe business hit by start-up costs

• Ao.com profits hit £16.5m, an increase of 47.3%
• Europe EBITDA reports £8m loss from German website start-up costs
• Boss John Roberts says “long-term plan on track”

Ao.com’s pre-tax loss for the year ending March 31 follows on from a loss of £7.6m in its previous financial year and after the retailer’s high-profile float last year.

The retailer attributed this year’s fall down to trading losses from its German website launch in September, which brought total group adjusted EBITDA to £8.5m for its year ending March 31, 2015.

The retailer issued a profit warning in February, where it said it expected to report a “very slight miss” from its previously forecast profit of £18.6m.

It reported a group operating loss of £2.2m, which was blamed on the investment in European start-up operations (£4.2m) and increase spend on its long-term incentive plan (£2.5m).

Adjusted operating profit hit £4.5m after the £8.2m deduction from Europe adjusted operating losses.

Chief executive John Roberts said: “Our long-term plan is on track and, despite missing our financial expectations for the year, we have continued to take market share in the UK MDA market delivering significant growth in UK sales and adjusted EBITDA.”

Total revenue increased 23.8% to £476.7m, while total UK revenue increased 22.3% to £470.8m. Website sales for the UK were also up 32.9% to £381.5m. Europe revenue for the six months of trading stood at £5.8m.

Over the year, the online retailer launched its audio-visual category, as well as finance options for consumers. The retailer reported the number of UK completed orders rose 26.4% to 1,348,000, while UK repeat purchase levels have grown from 36% to 45%.

“Ao is an exceptional business and I am very pleased with the achievements we have made over the year, particularly in Germany and with the successful introduction of the AV category to Ao.com,” continued Roberts.

“Our customer proposition remains strong – our unbeatable prices, huge range and amazing service mean our customer satisfaction levels have remained exceptional and we will continue to focus on this in the year ahead. The passion we have for our customers, staff and all other stakeholders has never been stronger and we still believe we can change the way Europe buys its electricals, simply by caring more and executing brilliantly.”

The retailer said that while the current trading environment in the UK remains challenging, it is on track with its plans for the beginning of its new financial year. It admitted there is a lot to do to build scale in Germany, but it is encouraged by the first six months of trading.

Meanwhile, non-executive director Bill Holroyd has decided to retire from the board to focus on his charity work. His position will not be replaced at the moment, and his committee duties will be assumed by other members of the board.