OPERATIONAL AND FINANCIAL REVIEW

In the 2026 financial year we remained focused on growing revenue while delivering profit and cash. Against an inflationary cost backdrop, we prioritised efficiency and mitigated cost increases through automation and process simplification.

Adjusted profit before tax increased to £50.5m, up c.16%, on revenue growth of 11.4%, reflecting improved gross margin and continued cost discipline across the Group delivering a PBT margin of c.4%. This represents further progress towards our medium-term 5% PBT margin target, supported by a stronger and more resilient operating model.

The Group also delivered a significant strengthening of the balance sheet, moving from £35.9m net debt to £16.4m net funds, underpinned by strong cash generation and disciplined working capital management. The strong conversion of profit into cash has enabled disciplined capital allocation in the year, including continued investment in the business, funding the EBT (£4.2m), a £10.1m share buyback programme and a significant strengthening of the balance sheet to a net funds position.

Operationally, this performance was driven by continued market share gains in core Retail, the return to profitability in Mobile and the rapid improvement in musicMagpie, alongside the strength of our customer proposition. This is reflected in market-leading customer satisfaction, with a Trustpilot rating consistently above 4.9 out of 5 across more than one million reviews, and continued progress in our membership proposition, which is supporting increasing customer engagement and long-term value creation.

While the external environment remains uncertain, we remain confident in our ability to continue to grow revenue, improve profitability and generate cash, supported by ongoing investment in automation and our vertically integrated platform.

Operational highlights

B2C Retail

Our B2C Retail business remains one of the UK's market leaders in major domestic appliance ("MDA") retailing, serving customers primarily through our ao.com website and selected third‑party marketplaces. Alongside our core MDA offer, we continue to broaden our range across SDA, computing, AV, mobile, consumer electronics, gaming and smart home products.

ao.com continues to be the cornerstone of our retail operations. We differentiate through our strong customer proposition underpinned by market‑leading service levels, competitive pricing, broad product choice and flexible options across delivery, installation, recycling and payment. We continuously monitor the market to ensure our pricing and proposition remain competitive and aligned to customer expectations.

Customer engagement remained strong throughout the year. Over 720,000 new customers chose to buy from AO, taking our total historical customer base to 13.3 million. We continue to maintain market‑leading customer satisfaction, with a Trustpilot rating consistently above 4.9 out of 5 across more than one million reviews. These satisfaction levels continue to support high levels of repeat purchasing and reflect our continued focus on delivering a consistently strong customer experience and getting it right first time.

Membership continues to perform well, supported by an expanding range and a broader ecosystem of customer benefits, including Switch24 and our recently launched MVNO proposition. All key underlying performance measures, including commercially sensitive metrics, remain positive, with growth in member numbers, improved renewal rates and members contributing an increasing share of wallet.

MDA remains our core category and central to our strategy. During the year, our share of the MDA market increased by over 1 percentage point to 17.1%, demonstrating continued share gains in a competitive market. We have also continued to expand our broader product range, with customers now able to access over 9,500 products across the site. During the year, we began exploring opportunities to expand into original equipment manufacturer ("OEM") propositions within audio visual categories. Whilst we are only in the early stages, the initiative has generated valuable learnings, with future expansion expected to focus primarily on MDA.

In the second half of FY26, we launched Switch24, our new mobile handset proposition. Initial performance was impacted by supply constraints, particularly around iPhone availability, and by the need to simplify customer messaging to more clearly articulate the value of the offer. Building on these learnings, the launch of our own mobile virtual network operator ("MVNO"), which launched in early FY27, will complete our vision for a simpler and more transparent way for customers to purchase mobile devices and connectivity.

Gross margin remained stable year on year, demonstrating the resilience of the B2C model despite changes in customer purchasing patterns, brand mix, and ongoing logistics cost pressures (see the logistics section below).

In response to ongoing inflationary cost pressures, and particularly rising employment costs, we have taken further steps to optimise our operating model. During the year, we successfully outsourced the majority of our inbound sales operations to a carefully selected third‑party partner based in South Africa whilst maintaining service quality for our customers. The savings delivered from this initiative were c.£2m with an expected annualised saving of c.£4m with the impact of dual running costs impacting in the year. Recruitment plans for the current year are expected to result in the majority of our customer engagement operations being based overseas by the end of the financial year.

We continue to offer customers a broad range of payment and service options. Our long‑standing partnership with NewDay, which provides customer finance and is regulated by the FCA, remains a core part of our proposition, supporting customer choice and affordability, with finance uptake at c.13% of sales. Our Care product protection offering also performed resiliently during the year, as customers continue to recognise the value and peace of mind these plans provide. We remain pleased with the performance of this proposition and the strength of our long‑term partnership with Domestic & General, which extends to 2033.

Mobile

The UK mobile market has continued to evolve, with customer demand increasingly shifting away from traditional post‑pay contracts towards disaggregated handset and airtime solutions. Given the size of the overall mobile market - and the fact it's the largest category in the electricals sector by value - the category remains strategically important to AO, especially given the frequency with which customers change their devices and the high level of engagement they have with the category.

Against this backdrop of a structurally shrinking contract market, it was imperative that our post‑pay Mobile business addressed the underlying economics and secured sustainable arrangements with the network operators on whose behalf we connect customers. During the year, we have made good progress in reshaping the business, agreeing improved commercial terms with our network partners, growing partnerships with Samsung and Lebara and materially reducing reliance on high‑cost customer acquisition channels. As a result, the Mobile business is now profitable, with performance across all key metrics improving year on year.

While the market remains competitive, we are encouraged by the steady and profitable performance delivered in the period. Our focus is now on concluding longer‑term agreements with the networks to provide greater economic certainty and support continued disciplined growth.

Post year end, we launched AO Mobile, starting with friendly user trials, which will be expanded in further phases, with full launch expected within the first quarter of FY27. We look forward to combining this with our Switch24 product and we expect the proposition to reflect customer demand for simple, low monthly pricing, providing access to the latest iPhone alongside a SIM-only plan.

musicMagpie

In a little over 15 months since acquisition, musicMagpie has moved from being a c.£6m loss-making business to an annualised run rate profitable business. This turnaround reflects a series of decisive actions taken during the period, including the exit from the loss‑making US operation and the consolidation of the warehouse footprint to improve efficiency and cost control.

Access to product supply, particularly in consumer technology such as mobile phones, is a key driver of profitability in recommerce. During the year, musicMagpie commenced a partnership with Timpson, enabling customers to trade in their mobile phones for cash in over 1,300 stores nationwide. This materially broadens access to supply and we expect to extend the model to additional technology categories over time.

The acquisition of musicMagpie has also benefitted the implementation of our Switch24 project. With over 15 years' experience in the mobile recommerce market and acting as a key outlet for Switch24 devices, musicMagpie is integral to Switch24's profitability and therefore to the economics of our broader membership proposition.

The business continues to receive external recognition for its market leadership. musicMagpie has been awarded a lifetime achievement award by eBay, recognising it as the largest seller in the platform's history with over 20 million positive feedback ratings. In addition, the 2026 Mobile News Awards named musicMagpie Online Retailer of the Year.

Looking ahead, we continue to see opportunities to enhance capability and capture additional value across consumer technology categories, while further strengthening our ESG credentials. Over time, this is expected to improve the affordability of products for customers on ao.com and further differentiate the AO proposition.

Logistics

Our market‑leading in‑house logistics infrastructure enables the nationwide delivery of millions of products each year, operating seven days a week and serving both AO's retail business and third‑party clients. The network is centred around our national hub in Crewe and spans warehouses and distribution centres totalling over 2.0 million sq ft as at today, supported by a network of 17 delivery depots across the UK.

Labour represents a significant proportion of costs across our warehousing and delivery operations. As a result, inflationary pressures arising from changes to National Insurance and the National Minimum Wage in April 2025 had a material impact on operating costs of c.£8.5m across the Group year on year. In response, we implemented a range of mitigating actions, including changes to warehouse shift patterns, team structures and the management of returns operations, to improve efficiency and productivity.

Fuel and electricity are also material components of our cost base. In line with the Group's hedging policy, 80% of expected fuel usage has been hedged through to March 2027, and substantially all electricity usage across the Group is fixed until October 2027, providing greater cost certainty.

As part of the Group's wider technology roadmap, we continued to progress the upgrade of our warehouse management system, which is expected to be completed in FY28. This programme is intended to improve operational resilience, scalability and data visibility across the network.

With a continued focus on profit and cash generation amid persistent inflationary pressures, we carried out a small-scale, exploratory trial during the year to test the use of robotics within our warehousing operations. The early results are encouraging, and we are extending this trial into FY27, including testing in a live operational setting, to develop our understanding further. We continue to review opportunities to optimise our logistics network as part of our focus on improving efficiency and supporting future growth.

Investment in the delivery fleet also continued, with a focus on increasing capacity and lowering emissions. During the year, 160 new delivery vehicles were added, including 10 electric vehicles, as we continue to evaluate the scalability of electric delivery solutions. In addition, we are targeting 2035 for the transition of the vast majority of our trunking fleet to compressed natural gas (CNG) (or other lower-carbon alternatives as technology develops).

Our operations remain highly adaptable to the retail business's demand for driver resources and are able to leverage operational gearing through third‑party logistics volumes. Our expertise in complex two‑person delivery, which is highly valued across the industry, enables incremental profitability whilst ensuring strong service levels in the core retail business.

Recycling

Our recycling facility in Telford is one of the most sophisticated refrigeration recycling plants in Europe and operates to the highest UK and European environmental standards. The plant ensures the safe and efficient capture of environmentally harmful gases and oils, supporting both regulatory compliance and our ESG objectives.

The facility specialises in the recycling of refrigeration products, including large American‑style refrigerators, while also processing all other domestic fridges and a wide range of white goods. Where appliances are assessed to still have a viable useful life, our highly skilled repairs team refurbishes these products, which are then sold with a warranty through our established base of trade customers, maximising reuse outcomes.

For end‑of‑life products, our focus is on maximising value recovery from raw materials. To support this, we have developed a bespoke plastics refining facility alongside the recycling plant, enabling us to process plastic output into higher‑value, commoditised forms rather than lower‑grade waste streams.

During the year, we recycled or reused over 1.3 million products, bringing the total number of products recycled or reused since inception to over 10 million. While global commodity price pressures during the year have reduced recycling input values and increased net processing costs, we continue to actively manage this through operational efficiency and downstream value optimisation.

We remain committed to ongoing investment in our recycling operations. This includes the acquisition of 120k square feet of additional space and further investment in the plastics facility to enable the conversion of plastic waste into refined pellets, a more standardised and higher‑value product. Our circular‑economy partnerships with customers such as Volution Group and Ultra‑Polymers continue to strengthen, with processed plastic pellets repurposed into new products including ventilation components. Our medium‑term strategic objective remains "Closing the Loop": forming deeper partnerships with manufacturers to supply recycled materials back into the production of new electrical appliances, thereby maximising value recovery.

Our vertically integrated logistics network continues to support the collection of third‑party volumes, including from local authority amenity sites. This approach improves service efficiency while reducing vehicle miles and associated emissions.

We continue to monitor potential legislative developments, including Extended Producer Responsibility and proposals that may require retailers to collect old appliances free of charge at the point of delivery of new products. While such changes would add complexity and cost to the sector, our integrated logistics and recycling capabilities position us well relative to competitors. Should these requirements be introduced, they could also create additional downstream recovery and recycling opportunities for the Group.

Technology

Technology investment remains focused on improving operational efficiency, reducing cost-to-serve and enhancing customer experience, supporting the Group's delivery of profitable growth.

Total ERP programme expenditure in FY26 was £3.8m (FY25: £2.0m). In the year we progressed Phase 2 of our ERP programme, the replacement of our warehouse management system, which is expected to simplify processes across supply chain and warehousing operations and improve data visibility.

We replaced our contact centre platform during the year which didn't go as smoothly as we hoped. We now look forward to building AI solutions on top of it, to improve customer experience and lower costs.

We continue to deploy data and analytics, including targeted use of AI, in specific operational areas such as demand forecasting, pricing optimisation and customer service automation, where benefits can be clearly measured in terms of cost and performance. Cyber security remains a priority, with continued investment in resilience, governance and monitoring capabilities.

Technology investment is expected to increase in FY27 as these programmes move into implementation, with a continued focus on disciplined returns, operational efficiency and scalable growth.

Financial performance

Revenue

For the 12 months ended 31 March 2026, total revenue increased by 11.4% to £1,266.6m (2025: £1,137.5m).

B2C Retail revenue

Revenue in our core B2C Retail business has increased 9.5% year on year. This increase is driven by growth in product, service, delivery and product protection plan sales. Product revenue and associated 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, where our share of the total market grew over 1% to 17.1% but also in other key categories including SDA and AV where we also made market share gains year on year.

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 by 11.9% year on year in B2B, as expected, in line with the Group's focus on optimising for profitability.  We expect a small single digit decline in revenue in FY27, but the reset of B2B has been materially completed.

Mobile revenue

Mobile revenue decreased by 18.4% year on year, reflecting the shift in focus towards profit generation. As we prioritised margin optimisation and tighter acquisition cost disciplines, connection volumes reduced as a consequence. This, alongside a softer market for new mobile contracts, resulted in lower overall commission income from network partners.

Recommerce revenue

Recommerce revenue is generated from product sales through musicMagpie and ElekDirect, as well as reworked recycled products through AO Recycling. Revenue grew year on year by 180.5% to £119.5m (2025: £42.6m), with the majority of the increase attributable to a full year of musicMagpie consolidation.

Third-party logistics revenue

Third‑party logistics revenue increased by 9.2% year on year to £33.3m (2025: £30.5m), driven by demand for our market‑leading expertise in complex two‑person delivery. We provide delivery and related services for a number of third‑party clients in the UK, including Hisense and Simba. This activity generates incremental profitability by leveraging existing infrastructure and operational capacity. The Group will continue to optimise this opportunity to benefit from operational gearing, while maintaining focus on the core retail business.

Recycling revenue

Recycling revenues increased by 6.8% during the year, representing a resilient performance given the wider trading environment. Higher major domestic appliance sales and increased customer uptake of our recycling services drove year on year growth in processed volumes, supported by the introduction of palletised plastic processing. This increase in volumes was partly offset by a reduction in output prices for recycled materials, reflecting broader market conditions.

Gross Margin

Gross profit, comprising product margins, services and delivery costs, increased by 14.5% to £316.1m (2025: £276.0m), exceeding the 11.4% growth in revenue. The 0.7 percentage points increase in gross margin to 25% was driven by the pivot to profit in mobile as well as the inclusion of a full year of musicMagpie trading. While inflationary pressures and lower average selling prices continued to impact delivery costs, these were more than offset by the operational efficiencies, targeted pricing actions and ongoing margin optimisation.

Selling, General and Administrative Expenses ("SG&A")

SG&A costs, excluding the adjusting items (see Alternative Performance measures for further detail) increased to £266.7m (2025: £232.1m). The drivers of the increase were as follows:

Advertising and marketing costs increased to £53.5m (2025: £44.4m), primarily reflecting the consolidation of a full year of musicMagpie trading, which contributed approximately £3.5m of the increase. Continued investment in brand awareness also resulted in a year on year increase of around £1.0m, including spend on merchandise.

A highly competitive marketplace, combined with subdued market growth and an inflationary cost environment, led to increased investment in direct customer acquisition channels, particularly PPC, which increased by approximately £8.4m year on year. These increases were partially offset by a reduction of around £4.0m in Mobile acquisition spend following the successful pivot of the Mobile business to a profitable and more sustainable operating model.

Approximately 30% of warehouse costs relate to infrastructure and running costs for warehousing and outbases across the logistics business as well as the infrastructure costs relating to musicMagpie warehousing and for our inhouse recycling plant. The remaining c.70% of warehousing costs relate to people related costs which have been impacted by ongoing inflationary pressures. Of the £13.1m increase in warehousing year on year, musicMagpie accounts for £7.3m of increase with the remainder of the increase attributable to volume increase and inflationary pressures on labour costs. The business continues to look to offset the impact of inflation through efficiencies and advancements in the use of robotics in warehousing.

Other administrative costs decreased marginally as a percentage of revenue, with total spend of £138.2m (2025: £125.7m). The inclusion of musicMagpie for a full year accounts for £11m of the increase. Inflationary pressures, primarily wage-driven, together with continued investment in our ERP programme, have been partly offset by offshoring and ongoing right-sizing of the business.

Adjusted profit before tax

Adjusted profit before tax ("Adjusted PBT") is used by the Group as an additional measure to assess underlying financial performance and is consistent with how performance is monitored by management and the Board.

There were no adjusting items in the year, with Adjusted PBT therefore equal to reported Profit Before Tax. This represents a positive step in the quality and transparency of earnings compared to the prior year, where results included a number of one-off and non-cash items.

The reconciliation of statutory Profit Before Tax to Adjusted PBT is set out in table 4.

In the prior year, adjusting items related to acquisition-related costs and non-cash impairments of goodwill and intangible assets in the Mobile business, which are excluded to aid comparability of underlying performance.

Earnings per share

Earnings per share were as follows:

Adjusted basic earnings per share is calculated by adding back the Adjusting items in the prior year noted above.

Cash, balance sheet and capital allocation

The Group delivered strong cash generation in the year, with a cash inflow of £53.9m (2025: £12.7m outflow), resulting in a significant strengthening of the balance sheet and a move to a net funds position at year end. Available liquidity increased to £201.3m, supported by strong operating performance and continued capital discipline. The table below highlights the key movements:

Free cash flow increased to £66.4m (2025: £26.3m), reflecting strong operating performance, disciplined investment and improved working capital management. This level of cash generation provides the Group with increased flexibility to invest in strategic growth, return capital to shareholders and maintain a resilient balance sheet.

Capital allocation

The Group operates a disciplined capital allocation framework designed to balance financial resilience, investment for growth and the return of surplus capital to shareholders in a consistent and transparent manner.

The first priority of the framework is to maintain a strong balance sheet and appropriate liquidity headroom, reflecting the working capital intensity and cyclical nature of the Group's markets. This includes ensuring sufficient resources to absorb volatility, support trading and maintain stakeholder confidence through the cycle.

The Group does not manage the business to a fixed leverage target. Instead, we adopt a disciplined and flexible approach to balance sheet management, ensuring that leverage, liquidity and covenant headroom remain appropriate to the scale and cyclicality of the business. Our strong cash generation and capital-light model typically support a low level of financial leverage, with the Group able to move between net funds and modest net debt positions depending on investment requirements and market conditions. This flexibility is a core component of our capital allocation framework and enables the Group to respond dynamically to opportunities while maintaining financial resilience.

Beyond this, capital is allocated to support strategic investment in the business, including logistics, technology and infrastructure initiatives necessary to drive sustainable long-term value creation. All investment decisions are assessed against disciplined financial criteria, including returns above the Group's cost of capital, cash payback and strategic alignment with our vertically integrated model. In practice, this results in a selective approach to capital deployment, with investment prioritised towards opportunities that enhance operational efficiency, scalability and long-term cash generation.

The Group's growth strategy is primarily organic; however, we will consider opportunities for targeted M&A where these are consistent with our strategy and enhance our capabilities. All opportunities are evaluated on a disciplined, case-by-case basis within our capital allocation framework.

While the specific return profile varies by project type, we remain focused on delivering sustained improvements in ROCE over time. Where capital is generated in excess of these requirements, the Board will consider returning surplus funds to shareholders. The level and certainty of such returns are assessed against the Group's financial position, forward investment requirements and market conditions, ensuring that flexibility is preserved.

Consistent with this approach, the Group completed a £10.1m share buyback programme during the year. Share buybacks are the preferred method of return where they represent an attractive return relative to the Group's cost of capital, providing flexibility and value accretion for continuing shareholders.

The Group will continue to apply this framework dynamically, ensuring that capital allocation decisions remain aligned to long-term shareholder value while maintaining financial resilience and strategic flexibility.

Cash inflow from operating activities £95.7m (2025: £58.0m)

The cash inflow from operating activities was largely driven by the post tax operating result of the Group and a continued improvement in working capital management.

The Group's movement in working capital outflow is set out in the table below:

Inventory reduced by £1.1m year on year, reflecting a deliberate rebalancing of stock aligned to our strategic priorities. This movement was driven by two offsetting factors: continued growth in the Core Retail business, where we increased inventory by £13.0m to support category expansion, improved availability and service levels; and a £14.0m reduction in Mobile stock. The decrease in Mobile inventory reflects our pivot away from chasing volume in the post‑pay market, alongside a disciplined and targeted programme to exit older stock lines. Overall, these actions demonstrate tighter inventory management, improved capital efficiency and a clearer focus on areas of the business that generate sustainable returns.  Inventory days were 40 days at 31 March 2026 (31 March 2025: 47 days).

Receivables increased by £6.7m year on year, driven by two principal factors. First, changes in the mix of connections across mobile network operators resulted in a higher level of receivables outstanding at the year end. Second, the timing of the Samsung S26 launch materially impacted the phasing of connections, with stronger volumes in March 2026. By contrast, March FY25 volumes were subdued due to the delayed launch of the S25, creating a lower comparative receivables balance at the previous year end.

Payables increased by £25.4m year on year, primarily reflecting the impact on trade payables of the higher level of Retail inventories noted above. In addition, continued growth in membership and the increase in sales resulted in higher deferred income liabilities.  Creditor days at 31 March 2026 were 49 (31 March 2025: 52) reflecting continued support from our supplier base with the reduction driven by the mix of supplier balances at year end.

The strength of operating cash flow relative to profit also reflects the improving quality of earnings and disciplined conversion of profit into cash.

Cash outflow from investing activities £3.9m (2025: £13.5m)

Cash capital expenditure in the year was £6.0m (2025: £8.9m), with the majority relating to continued investment in our Recycling facility, including the purchase of additional land (which had previously been leased) and plant and machinery to drive further efficiencies. Other additions are mainly replacement in nature, including IT.

Reported capital expenditure is lower than the underlying level of investment in the business, reflecting the increasing use of lease and hire purchase arrangements to fund strategic programmes. In particular, the Group has continued to invest in its logistics capability, including the start of a significant refresh of the delivery fleet. A substantial proportion of this investment is therefore reflected within lease liabilities rather than capital expenditure, consistent with the Group's focus on capital efficiency and balance sheet flexibility.

On a combined basis, capital expenditure and lease-funded investment provide a more representative view of the Group's total investment in operational capacity during the year. Looking ahead, we expect investment levels to increase in FY27 to c.£29m as key programmes continue, including further fleet replacement with the addition of 360 vehicles, technology investment and infrastructure development, with the mix between capital expenditure and lease-funded investment determined on a project-by-project basis albeit it is anticipated that the vehicle funding of c.£22m will be lease funded. Consistent with our capital allocation priorities, all investment decisions continue to be assessed against returns above the Group's cost of capital while maintaining balance sheet strength and funding capacity for future growth. Recent initiatives, continued investment in our ERP transformation programme, expansion of our recycling capabilities and the refresh of the fleet have been progressed under this framework, balancing upfront investment with expected efficiency gains, scalability and long-term cash returns.

Higher cash balances throughout the year resulted in interest received increasing to £2.1m (2025: £1.0m).

In the prior year, the Group acquired the whole of the issued share capital of musicMagpie for net cash consideration of £5.7m.

Cash outflow from financing activities £37.9m (2025: £57.2m)

Financing cash outflows in the year were primarily driven by ongoing structural obligations, with capital and interest repayments on leases totalling £23.8m (2025: £24.5m), principally relating to the Group's logistics property estate and vehicle fleet. In addition, other interest payments amounted to £1.3m (2025: £2.3m).

Activity in relation to employee share schemes resulted in a net outflow in the year. The Group's Employee Benefit Trust acquired shares in the market for £4.2m (including fees) to satisfy awards under share-based payment arrangements. This was partially offset by £1.8m of cash inflows from employees following the vesting of a SAYE scheme.

Consistent with our capital allocation priorities, the Group also completed a share buyback programme during the year, resulting in cash outflows of £10.1m (including expenses).

In the prior year, financing cash flows included £19.1m of borrowings repaid following the acquisition of musicMagpie.

Net funds and total net debt

As a result of the above movements, Net funds/ (debt) were as follows:

The Group delivered a significant strengthening of its balance sheet in the year, moving from net debt of £35.9m at FY25 to a net funds position of £16.4m at FY26. This £52.3m improvement reflects strong underlying cash generation and continued discipline in capital allocation, materially enhancing financial flexibility at the year end.

Gross borrowings remain modest, with £1.7m (2025: £1.9m) relating to a mortgage used to part-fund the acquisition of one of the Group's recycling sites.

Total lease liabilities increased by £1.7m to £63.1m (2025: £61.4m), reflecting capital repayments of £20.2m broadly offset by £22.3m of new lease additions in the year. The composition of these liabilities continues to evolve, with growth in "owned asset" lease liabilities driven by the ongoing refresh of the Logistics fleet, principally funded through hire purchase arrangements. We expect to add a further 300 delivery vehicles during FY27 on hire purchase contracts as older vehicles are replaced.

Right-of-use liabilities reduced by approximately £11m during the period, reflecting the natural run-off of the existing estate, partially offset by lease renewals. Looking ahead, we expect right-of-use liabilities to increase in FY27 by c.£20m as a result of new leases plus the renewal of leases for a number of key properties, albeit this is dependent on the timing and terms of these additions.

The Group maintains a strong liquidity position, supported by a £120m revolving credit facility which remains fully undrawn and is available through to October 2028.

Taxation

The tax charge for the year was £14.6m (2025: £10.9m) resulting in an effective rate of tax for the year of 28.9%. The effective rate of tax is higher than the UK corporation tax rate for the period of 25%, primarily due to the add-back of the IFRS 2 share-based payment charge for which no corresponding corporation tax deduction has been recognised in the year. 

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 has performed an assessment of this legislation and does not expect a material exposure to Pillar Two income taxes.

Our tax strategy can be found at ao-world.com/responsibility/group-tax-strategy.

CONDENSED CONSOLIDATED INCOME STATEMENT

For the year ended 31 March 2026

The Group has no items of other comprehensive income for the period ended 31 March 2026 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 2026