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Overview“Our valuesare the foundationof our Let’s goculture”Strategic ReportValuesWe have always been Bold from day one. Wedare to be different and we thrive in a seriouslycompetitive sector. Still, we don’t follow trends: weset them.Smart:To make our bold aims work we’re Smart – anyonecan promise the earth but we aim to find a way todo what looks impossible. We admit our mistakesand learn.Driven:To turn impossible-sounding ideas into reality youhave to be Driven. Things may get tough be we’venever done anything just because it’s easy.Fun:Doing challenging things with like-minded peopleis what gets us out of bed and give our best. That’swhat makes AO a place where you can reallyhave Fun.Care:Underpinning everything is the way we Care.About people, about our work and about buildingsomething that really makes a difference.AO World PlcAnnual Report and Accounts 202007Shareholder InformationBut we’re also here to make a difference.Helping customers by transforming ourworld into something better, one bravenew idea at a time.Bold:Our ResultsAO is a trustworthy smile in a world ofuncertainty. Striking a perfect balancebetween certainty and creativity,we don’t just nail the basics (greatproducts, prices and service, all reliablydelivered), we also challenge stuffy oldconvention. We’re taking on the bland,the boring and the faceless, to offer abetter, braver kind of customer service.We’re relentless. Spirited. Full of beans.We’re always seeking out newways to fix broken things and makethem brilliant.Our GovernanceJust like our purpose, ourvalues are what makes us sucha special business. They shapehow we live by our purpose,and guide us to achieving ourgoals the right way. Our valuesdon’t exist in isolation: they area collective. They form a verycompelling story.

Our resources and relationshipsthat allow us to deliver our eco-system continuedFor 20 years we’ve been there when customershave needed us. Once they’ve shopped with AO,they come back again and again.CustomerrelationshipsHAPPINESS SCORE†949290888684AO.COM ON SOCIAL MEDIA82TRUSTPILOT 150k4.7/5reviews80Sep 17†av. ratingFACEBOOK 1.8m 4.0mfollowersimpressions*TWITTER 66k 27kJul 188389* Data during w/c 23 March 2020. Impressions aredefined as the number of times a social mediapost is viewed in users’ social media feeds.Feb 19May 19Aug 19Dec 19Mar 20“ I think our NPS scores and customerFY20 34kimpressions*Oct 18NET PROMOTER SCORE UK average including MPDINSTAGRAMfollowersApr 18impressions*followers 31kDec 17 ur quality team ask our customers to describe in one word how they rate their experience on theOphone with our people. These responses are then categorised into “Exceptional, Happy, Indifferent,Unhappy” and turned into a score so that we know where we’re getting it right for customers and wherewe need to improve.(FY19: 85, UK average(excluding MPD))Germany averagefeedback speak for themselves. Whileretail stores have had to close, wehave been able to continue providingvital products and services to all ourcustomers. I’m sure we will emergefrom this crisis as a stronger businesswith a powerful customer-focusedand trusted brand.”AO employee, Covid-19 survey(FY19: 89) NPS is a industry measure of customer loyalty and satisfaction.UK CUSTOMER‡ BASEUK NEW CUSTOMERS VS REPEAT CUSTOMERS: (%)UK CUSTOMERS: (000s)60%8,000New customersRepeat customers– Repeat 0Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q40FY15‡FY16FY17FY18FY19FY2020152016 A customer is defined as an individual customer who has purchased through us via ao.com08AO World PlcAnnual Report and Accounts 202020172018201920200%

Infrastructureand ITOverviewWe operate a similar model in Germany: we currently have adistribution centre in Bergheim and a number of outbases andcustomer service centres across Germany.Our core technology systems are a mixture of best-ofbreed commercial off-the-shelf and modern custom-builtcomponents. This affords us a loosely coupled, highlyconfigurable enterprise technology estate that is resilientto changes in demand and easily adapted as businessrequirements change.Systems are well integrated with our key suppliers, with ashared ownership model for integrations. We regularly work withsuppliers to improve integrations at both sides, offering adviceand support on best practice.We utilise Cloud services in various forms, for speed of delivery,lean cost profile, enhanced security and outsourcing ofspecialist infrastructure maintenance and support.Through our product team model we can quickly and safelyevolve our front end platforms to be best in class. the manufacturers and distributors that supply productsto us; our delivery providers ranging from national organisations,(e.g. DPD and Collect ) to whom we outsource deliveries ofsmaller products, to individual contracted drivers and small/local businesses who provide the two-man home deliveryservice for our MDA products); third-party providers of significant plant and infrastructure(particularly in our recycling business and IT systems); Mobile Network Operators; andDomestic & General, for whom we provide productprotection plans as agent, and our credit provider financepartner, NewDay, for whom we also act as agent.Our belief is that both we and our suppliers benefit the mostwhere we have long-term mutually supportive relationships inplace; we recognise that driving a fair bargain rather than ahard bargain will build long-lasting and fruitful relationships.We are careful to listen to the concerns of all suppliers and actaccordingly. We have regular meetings at both operationaland strategic levels with key suppliers and put in place clearservice level agreements to ensure suppliers have a goodunderstanding of, and are able to meet, our expectations.This may manifest itself differently across our businessunits; for example, manufacturer suppliers supporting theformalisation of our B2B offering or the collaborative approachundertaken with the supplier for the design and build of ourrecycling and plastics plants. Our relationships with them areextremely important as we seek to develop new opportunities,driving value as part of a two-way relationship.AO World PlcAnnual Report and Accounts 202009Shareholder InformationA number of third-party retail clients are now choosing to useour market-leading two-man delivery service to offer a speedyand reliable service to their customers. We are able to providethem with control over when, how and where their productsare delivered via our fully integrated end-to-end platform. Ourmodular service offering allows third-party clients to choosefrom a range of other services we provide, such as returnsprocessing, storage and back haul services, to suit their needs.As we continue to diversify and leverage our expertise in theUK, our supplier relationships have broadened and we have keyrelationships with:Our ResultsThe services we offer to the end customer are broad; from thebasics of unpacking and inspecting customers’ products, tocomplex gas cookers, American side-by-side fridges, integratedappliance installations, hanging TV's on walls and the removaland recycling of old appliances.SupplierrelationshipsOur GovernanceOur scalable delivery network operates from our “hub” inCrewe, comprising three distribution centres with a total of over800,000 square feet of space, and via our network of 17 deliverydepots across the UK.Strategic ReportIn the UK, our market leadinglogistics-as-a-service solutiondelivers millions of products a year,nationwide, seven days a week, tocustomers on behalf of AO’s retailbusiness and a growing number ofthird-party retail clients.

Customer testimonial“ The best ever!!I had my brand newwashing machineperfectly deliveredand installed only18 hours afterordering it – I can’tfault a thing!”BarryAn AO customer

Strategic Report12Chairman’s statement15Chief Executive Officer’s strategic review18Q&A24Marketplace25Our markets: UK28Our markets: Germany30Our business model32Our strategy36Our risks50Corporate social responsibility63Chief Financial Officer’s review

Chairman’s statementFY20 has been a year of change and transitionfor AO. A fundamental review of the business,its objectives, business model and culture wasconducted at the start of the year following JohnRoberts’ reappointment as CEO. Although thisconfirmed no material change in AO’s overallstrategy, its execution has been pursued withgreater clarity and renewed vigour. As a result, AOhas had a successful year and has made strongprogress against its four immediate strategicpriorities as John sets out in his letter.Group revenue increased by 15.9% to 1.05bn withUK revenue up 20.3% to 901.6m. UK performancewas driven by a return to growth in the engine ofour business, MDA, where we achieved our target ofdouble-digit growth in the final quarter of reportingperiod at 19.9% year-on-year. We made significantprogress in improving the breadth and usabilityof our retail experience, attracting and retainingmore and more customers as they experience abetter experience of shopping through the AOWay. Our performance is particularly pleasing as,prior to the impact of coronavirus towards theend of the reporting period, the MDA market wasbroadly flat year-on-year.Following the appraisal of our European operationat the beginning of the reporting period, we beganto reposition our German business and have madesignificant progress in our journey to profitability.However, to allow management to prioritiseand focus on improvements to performance inGermany we took the tough decision in November2019 to close our operations in the Netherlands.This was no reflection on our team in theNetherlands who remain a credit to AO and thereis nothing to preclude us from returning to thisterritory if appropriate.From this repositioning, Europe revenue reducedslightly by 4.6% year-on-year to 165.4m. However,we made substantial improvements in our grossmargin in Germany which, in the second half of thereporting period, was 4.0% compared to a grossloss in the first half of 0.7%.Cost ratios in Germany also improved followingimplementation of our One AO model which isfocused on ensuring that all employees, across allparts of AO, behave as one and operate efficiently.This centralised approach only devolves functionsto local operations where necessary, ensuringno duplication of costs. It also creates a scalablemodel for growth, providing consistency inoperations and standards. Its benefits are alreadybeing exploited throughout the Group.Group Adjusted EBITDA for the period improved by53.6% to 19.6m (2019: 12.8m). In the UK, AdjustedEBITDA increased 7.0% to 40.8m, and our Europebusiness reduced losses by 13.2% to 24.2m.The final few weeks of this financial year wereextraordinary. The impact of the coronaviruspandemic posed significant operationalchallenges to the business. We experienced12AO World PlcAnnual Report and Accounts 2020high levels of demand, akin to Black Friday, asthe market for electrical items migrated almostcompletely online overnight. Our UK and Germanteams navigated these challenges well, ensuringat all times that the safety of our people andour customers remained our top priority. Weadapted our services and invested to ensure socialdistancing, and enhanced safety measures toprotect our people in front line operational roles,while prioritising services to the most vulnerablemembers of society. Despite the challenges wefaced, we take confidence from our consistentlyhigh Net Promoter Scores, which illustrate theattractiveness of AO’s proposition to customers,and will continue to drive our growth.15.9%increase inGroupRevenueUK revenue up20.3%As covered in John’s report on page 15, cashconservation was a key focus for us in the yearunder review and I’m pleased that we havereduced cash outflow and by year end werecash generative.1 Shortly after the year end werefinanced our 60m Revolving Credit Facility and 20m Term Loan, which were due to run until June2021, into a new 80m Revolving Credit Facility.With our current headroom on this new facility andGroup cash resources, we are well-funded.EuropeanAdjustedEBITDA losses ( )reduced by13.2%In this year of transition, the Board focused itsattention on immediate business priorities. Withthe retirements from the Board of Brian McBride (inJuly 2020) and Jacqueline de Rojas (in September2020), we expect in time to make further NonExecutive Director appointments.We closed the year in a good position, as actionstaken to strengthen the business flowed into ourfinancial results. We thank our teams across thebusiness for the culture they live and breathe everyday; its value has shone through, particularly overthe last few months as our people have shown theirdedication to AO and worked tirelessly to overcomethe challenges presented by coronavirus and tocontinue to deliver for all our customers. Althoughwe now face uncertain macroeconomic conditions,AO’s business model means that we are preparedand well placed to continue to serve our customersas the trend to digital accelerates.You will see in our Directors’ remuneration reportthat, subject to shareholder approval, we areseeking to implement a Value Creation Planin which all employees of the Company will berewarded for creating exceptional value. AsLuisa D. Delgado (Chair of the RemunerationCommittee) states, we believe that such aninnovative all-employee model reflects the uniqueand collaborative culture at AO, and its core role atthe heart of our business; it will help galvanise theteam and drive the business further forward.I look forward to the Group’s progress over thecoming year and believe we have some veryexciting times ahead.Geoff CooperChairman13 July 20201 ash generative on a GroupCAdjusted EBITDA less debtrepayment, interest, taxesand monthly share ofannualised capex on a runrate basis by the end of theMarch 2020 financial year

“ A year ofchange andtransition.”Geoff CooperChairman

“ The One AO model andeco-system is a structuraladvantage when weleverage it effectively.I’m delighted that thewhole business is nowmore focused than everon customers, innovationand growth.”John RobertsFounder and Chief Executive Officer

Chief Executive Officer’s strategic reviewThe One AO approach will, at the right time, meanthat we can enter new markets quickly and witha much lower barrier to profitability and successrather than rebuilding in each new market.We have increased our tech investment by 2.4mduring the year, restructuring it around productteams to create deep expertise on key elements ofthe customer journey. This reorganisation requiredleaps of faith and trust from our teams. I want tothank them for the way that they have responded.There have also been leaps of faith requiredfrom our brand partners to fix some of thefundamentals as we centralised, particularly inour German operations. I would like to thank themall for their faith in us, which I’m confident will berepaid in spades.The past few months have deepened theserelationships and the trust that our brandpartners, our customers – existing and new, andour people have in our business. They all know theThis was against a backdrop of the issue of Brexit,which up until the outbreak of Covid-19 had beenthe major source of uncertainty for business andthe economy more widely.AO Finance launched in August offering a marketleading rolling credit facility giving more customersaccess to essential products through affordablefinance. Meanwhile, AO Business has been buildingand developing its pipeline and I am particularlypleased with its progress. AO Business is nowa supplier to 19 Housing Associations, roughly10% of the UK’s social housing stock, and weare making significant inroads to the studentaccommodation and hospitality sector where wehave been successful in winning a number of newtenders. Similarly, we have made real progress inthe housebuilders sector, which despite Covidrelated shutdowns, remains a key growth areaover the medium to long term where there ispent up demand from time-pressed developersfor a 21st century proposition. Strong deals inMobilePhonesDirect mean we’re delivering on thepromise of better value, choice and service tocustomers in the UK market.As an industry, retail has had a significant impacton people’s lives. When we’re ambitious for ourcustomers, we also make a positive contributionto our communities. We have to show initiative anddo the right thing, and never more so than when itcomes to the environment.Shareholder InformationWe reorganised all of our core competencies, withthe first principle being to build expertise at thecentre and only devolve locally where necessary.We had to say goodbye to some AOers in theprocess including our team in the Netherlands.This was not easy and I thank them for theircontribution.I am pleased to report that our goal of doubledigit MDA growth was achieved during the finalquarter of our financial year, a momentumwhich continues. Profitability in Germany is nowa question of when not if, and by the year end wewere a cash generative business1 on a run ratebasis. We delivered a strong peak trading periodin Q3 in both the UK and Germany with that salesmomentum continuing into Q4.Our ResultsWe closed the financial year in good shape.On many levels, we went back to basics,bringing clarity and leadership to our businessfundamentals across the Group. The One AOmodel (explained in more detail on pages 22 and23) and eco-system is a structural advantagewhen we leverage it effectively. I’m delighted thatthe whole business is now more focused than everon customers, innovation and growth.While Covid-19 has undoubtedly accelerated salesthrough a forced migration to online, we came intoMarch having already made significant progresson the four immediate strategic objectives for theyear: double-digit UK MDA growth, acceleratingthe journey to profitability in Germany, being cashgenerative,1 and leveraging our eco-system furtherthrough our One AO approach.Our GovernanceWe played an active part in keeping familiesplugged in and powering on through lockdown.Online retail became a lifeline to get essentialproducts to customers during a national crisis,which I believe has accelerated customeradoption of online over this relatively short periodof time. It’s a road we’ve been building for twodecades as a business, and circumstances meanmore customers have experienced our AO service.AO smile is so much more than a logo. It’s in thetough times, not the good, that trust is tested andstrengthened.Strategic ReportWhen the Covid-19 pandemic hit, our mission wasto protect our people, continue to deliver safelyto customers and, in turn, protect the business.I’m grateful to everyone at AO for the incredibleefforts they made to do that.OverviewThe AO of today is very different from the AO of my last report.FY20 was about getting fit for purpose and focused. I’mpleased to say that we have made substantial progress duringthe year against our four key objectives and continue to do sointo FY21. In the last few weeks of FY20 the world changed.1. Cash generative definedas on a Group AdjustedEBITDA less debtrepayment, interest, taxesand monthly share ofannualised capex on a runrate basis.AO World PlcAnnual Report and Accounts 202015

Chief Executive Officer’s strategic review continuedAO’s new plastics recycling plant is operational,albeit in its final commissioning phase, while ourexisting facility processed its millionth fridgeduring the year. An independent report byAnthesis showed that our fridge recycling plantwas t

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